{"id":22533,"date":"2023-04-26T16:49:35","date_gmt":"2023-04-26T11:19:35","guid":{"rendered":"https:\/\/gstguntur.com\/?p=22533"},"modified":"2023-04-26T16:49:35","modified_gmt":"2023-04-26T11:19:35","slug":"voluntary-liquidation-of-companies-cs-professional-study-material","status":"publish","type":"post","link":"https:\/\/gstguntur.com\/voluntary-liquidation-of-companies-cs-professional-study-material\/","title":{"rendered":"Voluntary Liquidation of Companies &#8211; CS Professional Study Material"},"content":{"rendered":"<p>Chapter 8 Voluntary Liquidation of Companies &#8211; <a href=\"https:\/\/gstguntur.com\/cs-professional-insolvency-law-and-practice-study-material\/\">CS Professional Insolvency Law and Practice Notes<\/a> is designed strictly as per the latest syllabus and exam pattern.<\/p>\n<h2>Insolvency Concepts and Evolution &#8211; CS Professional Insolvency Law and Practice Study Material<\/h2>\n<p>Question 1.<br \/>\nWTC Ltd. had been incurring losses since inception and was decided to wind up. The company had several pending litigation and that claim against the company exceeded value of its assets and, thus, debt due to creditors could not be discharged in total. The company seeks your opinion for voluntary liquidation proceedings. Advise the company with the relevant provision under the Insolvency and Bankruptcy Code, 2016. (June 2019, 6 marks)<br \/>\nAnswer:<br \/>\nVoluntary Liquidation of Corporate Persons:<br \/>\nSection 59(3) of the Insolvency and Bankruptcy Code, 2016 provides that voluntary liquidation proceedings of a corporate person registered as a company shall meet the following conditions:<br \/>\n(a) A declaration from majority of the directors of the company verified by an affidavit stating that (i) they have made a full inquiry into the affairs of the company and they have formed an opinion that either the company has no debt or that it will be able to pay its debts in full from the proceeds of assets to be sold in the voluntary liquidation; and (ii) the company is not being liquidated to defraud any person;<\/p>\n<p>(b) The declaration under sub-clause (a) shall be accompanied with the following documents: (i) audited financial statements and record of business operations of the company for the previous two years or for the period since its incorporation, whichever is later; (ii) a report of the valuation of the assets of the company, if any prepared by a registered valuer;<\/p>\n<p>(c) Within four weeks of a declaration under sub-clause (a), there shall be<br \/>\n(i) a special resolution of the members of the company in a general meeting requiring the company to be liquidated voluntarily and appointing an insolvency professional to act as the liquidator; or (ii) a resolution of the members of the company in a general meeting requiring the company to be liquidated voluntarily as a result of expiry of the period of its duration, if any, fixed by its articles or on the occurrence of any event in respect of which the articles provide that the company shall be dissolved, as the case may be and appointing an insolvency professional to act as the liquidator.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/gstguntur.com\/wp-content\/uploads\/2021\/10\/GST-Guntur.png\" alt=\"Voluntary Liquidation of Companies - CS Professional Study Material\" width=\"123\" height=\"13\" \/><\/p>\n<p>Question 2.<br \/>\nWTC Ltd. had been incurring losses since inception and was decided to wind up. The company had several pending litigation and that claim against the company exceeded value of its assets and, thus, debt due to creditors could not be discharged in total. The company seeks your opinion for voluntary liquidation proceedings. Advise the company with the relevant provision under the Insolvency and Bankruptcy Code, 2016. (June 2019, 6 marks)<br \/>\nAnswer:<br \/>\nVoluntary Liquidation of Corporate Persons:<br \/>\nSection 59(3) of the Insolvency and Bankruptcy Code, 2016 provides that voluntary liquidation proceedings of a corporate person registered as a company shall meet the following conditions:<br \/>\n(a) A declaration from majority of the directors of the company verified by an affidavit stating that (i) they have made a full inquiry into the affairs of the company and they have formed an opinion that either the company has no debt or that it will be able to pay its debts in full from the proceeds of assets to be sold in the voluntary liquidation; and (ii) the company is not being liquidated to defraud any person;<\/p>\n<p>(b) The declaration under sub-clause (a) shall be accompanied with the following documents: (i) audited financial statements and record of business operations of the company for the previous two years or for the period since its incorporation, whichever is later; (ii) a report of the valuation of the assets of the company, if any prepared by a registered valuer;<\/p>\n<p>(c) Within four weeks of a declaration under sub-clause (a), there shall be &#8211;<br \/>\n(i) a special resolution of the members of the company in a general meeting requiring the company to be liquidated voluntarily and appointing an insolvency professional to act as the liquidator; or<br \/>\n(ii) a resolution of the members of the company in a general meeting requiring the company to be liquidated voluntarily as a result of expiry of the period of its duration, if any, fixed by its articles or on the occurrence of any event in respect of which the articles provide that the company shall be dissolved, as the case may be and appointing an insolvency professional to act as the liquidator.<\/p>\n<p>The proviso appended to sub-section(3) of Section 59 lays down that if the company owes any debt to any person, creditors representing two thirds in value of the debt of the company shall approve the resolution passed under sub-clause (c) within seven days of such resolution.<br \/>\nThus, as per Section 59(3) voluntary liquidation could only be undertaken if corporate debtor discharged its debts to satisfaction of creditors and if there was no litigation pending against corporate debtor. In the instant case since both these ingredients are not satisfied, hence the option for voluntary liquidation of the company could not be advised.<\/p>\n<p>Question 3.<br \/>\nWTC Ltd. had been incurring losses since inception and decided to wind up. The company had several pending litigations and that claim against the company, exceeded the value of its assets and thus, debt due to creditors could not be discharged in total. The company seeks your opinion for voluntary liquidation proceedings. Advise the company the relevant provisions under the Insolvency and Bankruptcy Code, 2016. (Dec 2021, 6 marks)<br \/>\nAnswer:<br \/>\nSection 59 (1) of the Insolvency and Bankruptcy Code, 2016 provides that a corporate person who intends to liquidate itself voluntarily and has not committed any default may initiate voluntary liquidation proceedings.<br \/>\nConditions for voluntary liquidation proceedings:<br \/>\nSection 59(3) of the Insolvency and Bankruptcy Code, 2016 provides that voluntary liquidation proceedings of a corporate person registered as a company shall meet the following conditions:<br \/>\na. A declaration from majority of the directors of the company verified by an affidavit stating that-<\/p>\n<ul>\n<li>they have made a full inquiry into the affairs of the company and they have formed an opinion that either the company has no debt or that it will be able to pay its debts in full from the proceeds of assets to be sold in the voluntary liquidation; and<\/li>\n<li>the company is not being liquidated to defraud any person;<\/li>\n<\/ul>\n<p>b. The declaration under sub-clause (a) shall be accompanied with the following documents:<\/p>\n<ul>\n<li>audited financial statements and record of business operations of the company for the previous two years or for the period since its incorporation, whichever is later;<\/li>\n<li>a report of the valuation of the assets of the company, if any prepared by a registered valuer;<\/li>\n<\/ul>\n<p>c. Within four weeks of a declaration under sub-clause (a), there shall be-<\/p>\n<ul>\n<li>a special resolution of the members of the company in a general meeting requiring the company to be liquidated voluntarily and appointing an insolvency professional to act as the liquidator; or<\/li>\n<li>a resolution of the members of the company in a general meeting requiring the company to be liquidated voluntarily as a result of expiry of the period of its duration, if any, fixed by its articles or on the occurrence of any event in respect of which the articles provide that the company shall be dissolved, as the case may be and appointing an insolvency professional to act as the liquidator.<\/li>\n<\/ul>\n<p>The proviso appended to sub-section (3) of section 59 lays down that if the company owes any debt to any person, creditors representing two thirds in value of the debt of the company shall approve the resolution passed under sub-clause (c) within seven days of such resolution.<br \/>\nThus, as per section 59(1) &amp; (3) voluntary liquidation could only be done if corporate debtor discharged its debts to satisfaction of creditors and if there was no litigation pending against corporate debtor. In the instant case since both these ingredients are not satisfied, hence the option for voluntary liquidation of the company could not be advised.<br \/>\nThe company could take steps to have recourse under section 271 of the Companies Act, 2013 or could take steps for compulsory liquidation by filing an application under section 10 of the Insolvency and Bankruptcy Code, 2016.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/gstguntur.com\/wp-content\/uploads\/2021\/10\/GST-Guntur.png\" alt=\"Voluntary Liquidation of Companies - CS Professional Study Material\" width=\"123\" height=\"13\" \/><\/p>\n<p>Question 4.<br \/>\nXYZ Ltd. was intending to initiate voluntary liquidation proceedings. A declaration was made by way of affidavit by some of the directors of XYZ Ltd. stating that the company will be able to pay its debts in full from the proceeds that may be realized from its assets sold during the process of Voluntary Liquidation.<br \/>\n(i) Can XYZ Ltd. initiate Voluntary Liquidation proceeding in compliance with the conditions given in the Insolvency and Bankruptcy Code, 2016?<br \/>\n(ii) What are the documents required to accompany the declaration?<br \/>\n(iii) What are the consequences, if the Articles of the Company fixed the<br \/>\nperiod or duration for which company may be active and that period expires? (Dec 2019, 2 marks each)<br \/>\nAnswer:<br \/>\n(i) Section 59(1) of the Insolvency and Bankruptcy Code, 2016 provides that a corporate person who intends to liquidate itself voluntarily and has not committed any default may initiate voluntary liquidation proceedings under the provisions of the Code.<br \/>\nA corporate person registered as a company has to meet the following conditions to initiate a Voluntary Liquidation Process:<br \/>\n(a) A declaration from the majority of the directors of the company verified by an affidavit stating they have conducted a full inquiry into the affairs of the company and have formed an opinion that either the company has no debts or that it will be able to pay its debts in full from the proceeds of assets to be sold in the Voluntary Liquidation; and<br \/>\n(b) That the company is not being liquidated to defraud any person. In this case it is stated that some of the directors signed the declaration and it is not coming out clearly that the directors who signed were in the majority. Moreover, the declaration relating to fraud is not there. Therefore, in this scenario, XYZ Ltd. cannot initiate Voluntary Liquidation proceedings in accordance with the Code.<\/p>\n<p>(ii) As per Section 59(3)(b) of the Code, the declaration shall be accompanied with the following documents:<br \/>\n(a) Audited Financial Statements and a record of business operations of the company for the previous two years or for the period since its incorporation, whichever is later.<br \/>\n(b) A report of the valuation of the assets of the company, if any, prepared by a registered valuer.<\/p>\n<p>(iii) If the articles of the company fixed the period of duration of continuation of the company and that period expires, XYZ Ltd. under section 59(3)(c)(ii) of the Code shall pass a resolution of the members of the company in a general meeting requiring the company to be liquidated voluntarily as a result of expiry of the period of its duration, if any, fixed by its articles or on the occurrence of any event in respect of which the articles provide that the company shall be dissolved, as the case may be and appointing an insolvency professional to act as the liquidator.<\/p>\n<p>Question 5.<br \/>\nMNO Private Limited has stopped its business operations and management has no further intention to continue its business operations. The Company has Assets in excess of Liabilities and hence, proposed Voluntary Liquidation of the Company as perthe Provisions of IBC, 2016. You are proposed to be appointed as Liquidator for the Voluntary Liquidation. The Directors have approached you to know the prescribed time lines for completion of Voluntary Liquidation Process. The Extra-ordinary General Meeting to approve the Voluntary Liquidation is proposed on 1st July 2021. Prepare a time line mentioning the probable date for the following activities as perthe IBC, 2016 and Regulations made thereunder:<br \/>\n(i) Voluntary Liquidation Commencement date<br \/>\n(ii) Date of Public Announcement<br \/>\n(iii) Intimation of Special Resolution for Voluntary Liquidation to IBBI and RoC<br \/>\n(iv) Receipt of claims and preparing list of stakeholders<br \/>\n(v) Submission of Preliminary Report<br \/>\n(vi) Distribution of Assets. (Aug 2021, 6 marks)<br \/>\nAnswer:<br \/>\nDate of EGM 1st July, 2021<br \/>\n(i) Voluntary Liquidation Commencement date &#8211; Date of EGM will be treated as Liquidation Commencement date &#8211; 1st July, 2021<br \/>\n(ii) Date of Public Announcement &#8211; Within 5 days from the date of Commencement-6th July, 2021<br \/>\n(iii) Intimation of Resolution to IBBI and Roc &#8211; within 7 days from the date of Commencement -8th July, 2021<br \/>\n(iv) Receipt of claims and preparing list of Stakeholders &#8211; 30 days from the date of Commencement- 31st July, 2021<br \/>\n(v) Submission of Preliminary Roport &#8211; Within 45 days from Commencement date-15th August, 2021<br \/>\n(vi) Distribution of Assets- Within six month from the receipt of amount to stakeholders.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/gstguntur.com\/wp-content\/uploads\/2021\/10\/GST-Guntur.png\" alt=\"Voluntary Liquidation of Companies - CS Professional Study Material\" width=\"123\" height=\"13\" \/><\/p>\n<p>Question 6.<br \/>\nInsolvency and Bankruptcy Code, 2016 deals with voluntary liquidation of corporate person. Comment.<br \/>\nAnswer:<\/p>\n<ul>\n<li>Voluntary liquidation of a company is now governed by the provisions of section 59 of the Code and relevant regulations issued under the Code.<\/li>\n<li>The corresponding provisions under the Companies Act, 2013 in this regard have been repealed.<\/li>\n<li>A corporate person will be eligible to opt for voluntary liquidation under the Code provided it fulfills the two mandatory conditions i.e.\n<ul>\n<li>either the company has no debt or that it will be able to pay its debts in full from the proceeds of assets to be sold in the voluntary liquidation; and<\/li>\n<li>the company is not being liquidated to defraud any person.<\/li>\n<\/ul>\n<\/li>\n<li>Code reduces the intervention of the regulatory authorities drastically that fasten up the process.<\/li>\n<li>Once the liquidation process is completed, the liquidator has to make an application to the Tribunal for passing the order of dissolution of the company<\/li>\n<li>Only solvent companies can file for voluntary liquidation and approval of creditors is mandatory.<\/li>\n<li>With the removal of the concept of official liquidator, the onus of the entire process is on company liquidator.<\/li>\n<li>The Code appears to be in harmony with the global practices removing overall obstacles which prevailed in older laws, due to which closure of solvent companies has become a lot smoother.<\/li>\n<\/ul>\n<p>Question 7.<br \/>\nExplain the reasons for Voluntary Liquidation of companies.<br \/>\nAnswer:<br \/>\nReasons for Voluntary Liquidation of companies are as follows:<\/p>\n<ul>\n<li>Not carrying business operations<\/li>\n<li>Commercially unviable<\/li>\n<li>Running into losses<\/li>\n<li>No revenue<\/li>\n<li>Promoters unable to manage affairs of the company<\/li>\n<li>Purpose for which company was formed accomplished<\/li>\n<li>Contract termination.<\/li>\n<\/ul>\n<p>Question 8.<br \/>\nWho may initiate voluntary liquidation proceedings?<br \/>\nAnswer:<\/p>\n<ul>\n<li>According to sub-section (1) of section 59, a corporate person who intends to liquidate itself voluntarily and has not committed any default may initiate voluntary liquidation proceedings under the provisions of Chapter V of Part II of the Code.<\/li>\n<li>Thus, in order to initiate voluntary liquidation proceedings under Chapter V of Part II of the Code, a corporate person who intends to liquidate itself voluntarily, must have not committed any default.<\/li>\n<\/ul>\n<p>Question 9.<br \/>\nWhat are the conditions for voluntary liquidation proceedings of corporate person registered as company?<br \/>\nAnswer:<br \/>\nVoluntary liquidation proceedings of a corporate person registered as a company shall meet the following conditions:<br \/>\n(a) a declaration from majority of the directors of the company verified by an affidavit stating that &#8211;<\/p>\n<ul>\n<li>they have made a full inquiry into the affairs of the company and they have formed an opinion that either the company has no debt or that it will be able to pay its debts in full from the proceeds of assets to be sold in the voluntary liquidation; and<\/li>\n<li>the company is not being liquidated to defraud any person;<\/li>\n<\/ul>\n<p>(b) the declaration under sub-clause (a) shall be accompanied with the following documents:<\/p>\n<ul>\n<li>audited financial statements and record of business operations of the company for the previous two years or for the period since its incorporation, whichever is later;<\/li>\n<li>a report of the valuation of the assets of the company, if any prepared by a registered valuer;<\/li>\n<\/ul>\n<p>(c) within four weeks of a declaration under sub-clause (a), there shall be<\/p>\n<ul>\n<li>a special resolution of the members of the company in a general meeting requiring the company to be liquidated voluntarily and appointing an insolvency professional to act as the liquidator or<\/li>\n<li>a resolution of the members of the company in a general meeting requiring the company to be liquidated voluntarily as a result of expiry of the period of its duration, if any, fixed by its articles or on the occurrence of any event in respect of which the articles provide that the company shall be dissolved, as the case may be and appointing an insolvency professional to act as the liquidator.<br \/>\nThe proviso appended to sub-section (3) of section 59 lays down that if the company owes any debt to any person, creditors representing two thirds in value of the debt of the company shall approve the resolution passed under sub-clause (c) within seven days of such resolution.<\/li>\n<\/ul>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/gstguntur.com\/wp-content\/uploads\/2021\/10\/GST-Guntur.png\" alt=\"Voluntary Liquidation of Companies - CS Professional Study Material\" width=\"123\" height=\"13\" \/><\/p>\n<p>Question 10.<br \/>\nWhat are the key differences in the procedure to be followed for voluntary liquidation as compared to the procedure to be followed for insolvent liquidation?<br \/>\nAnswer:<br \/>\nThough the procedure to be followed for voluntary liquidation proceedings under Chapter III is largely similar to the procedure to be followed for insolvent liquidation under Chapter III of the Code yet there are marked differences:<\/p>\n<ol>\n<li>To initiate voluntary liquidation proceedings, where the corporate debtor is a company, the directors have to provide a declaration of solvency and a declaration that the company is not being liquidated to defraud any person.<\/li>\n<li>The declarations have to be accompanied by (a) the audited financial statements of the company and (b) a record of its business operations for the previous two years or the period since its incorporation whichever is later.<\/li>\n<li>Further, a report of the valuation of the assets of the company prepared by a registered valuer has to be provided.<\/li>\n<li>A resolution in favour of the voluntary winding up of the company and appointment of an insolvency professional as the liquidator has to be passed within four weeks of the declaration under clause (a) of sub-section (3) of section 59.<\/li>\n<li>Where the company owes any debt to any person, creditors representing two-thirds in value of the debt of the company shall approve the resolution passed under sub-clause (c) within seven days of such resolution.<\/li>\n<\/ol>\n<p>Question 11.<br \/>\nDiscuss the salient aspects of \u201cInsolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017\u201d.<br \/>\nAnswer:<br \/>\nThese Regulations have come into force on 1st April, 2017. These Regulations shall apply to the voluntary liquidation of corporate persons under Chapter V of Part II of the Insolvency and Bankruptcy Code, 2016. Some of the salient provisions are as under:<br \/>\nInitiation of Liquidation:<br \/>\n1. Without prejudice to section 59(2), liquidation proceedings of a corporate person shall meet the following conditions, namely:<br \/>\n(a) a declaration from majority of<br \/>\n(i) the designated partners, if a corporate person is a limited liability partnership,<br \/>\n(ii) individuals constituting the governing body in case of other corporate persons, as the case may be, verified by an affidavit stating that-<\/p>\n<ul>\n<li>they have made a full inquiry into the affairs of the corporate person and they have formed an opinion that either the corporate person has no debt or that it will be able to pay its debts in full from the proceeds of assets to be sold in the liquidation; and<\/li>\n<li>the corporate person is not being liquidated to defraud any person;<\/li>\n<\/ul>\n<p>(b) the declaration under sub-clause (a) shall be accompanied with the following documents, namely:<\/p>\n<ul>\n<li>audited financial statements and record of business operations of the corporate person for the previous two years or for the period since its incorporation, whichever is later;<\/li>\n<li>a report of the valuation of the assets of the corporate person, if any prepared by a registered valuer.<\/li>\n<\/ul>\n<p>(c) within four weeks of a declaration under sub-clause (a), there shall be:<br \/>\n1. (i) a resolution passed by a special majority of the partners or contributories, as the case may be, of the corporate person requiring the corporate person to be liquidated and appointing an insolvency professional to act as the liquidator; or<br \/>\n(ii) a resolution of the partners or contributories, as the case may be, requiring the corporate person to be liquidated as a result of expiry of the period of its duration, if any, fixed by its constitutional documents or on the occurrence of any event in respect of which the constitutional documents provide that the corporate person shall be dissolved, as the case may be, and appointing an insolvency professional to act as the liquidator:<br \/>\nProvided that the corporate person owes any debt to any person, creditors representing two-thirds in value of the debt of the corporate person shall approve the resolution passed under sub-clause (c) within seven days of such resolution.<br \/>\n2. The corporate person shall notify the Registrar and the Board about the resolution under sub-regulation (1) to liquidate the corporate person within seven days of such resolution or the subsequent approval by the creditors, as the case may be.<br \/>\n3. Subject to approval of the creditors under sub-regulation (1), the liquidation proceedings in respect of a corporate person shall be deemed to have commenced from the date of passing of the resolution under subclause (c) of sub-regulation (1).<\/p>\n<p>Effect of liquidation:<\/p>\n<ul>\n<li>The corporate person shall from the liquidation commencement date cease to carry on its business except as far as required for the beneficial winding up of its business.<\/li>\n<li>Notwithstanding the provisions of sub-section (1), the corporate person shall continue to exist until it is dissolved under section 59(8).<\/li>\n<\/ul>\n<p>Appointment of Liquidator:<\/p>\n<ol>\n<li>Subject to regulation 6, the corporate person shall appoint an insolvency professional as liquidator, and, wherever required, may replace him by appointing another insolvency professional as liquidator, by a resolution passed under clause (c) of sub-section (3) of section 59 or clause (c) of sub-regulation (1) of regulation 3, as the case may be.<br \/>\nProvided that such resolution shall contain the terms and conditions of appointment of the liquidator, including the remuneration payable to him.<\/li>\n<li>The insolvency professional shall, within three days of his appointment as liquidator, intimate the Board about such appointment.<\/li>\n<\/ol>\n<p>Eligibility for appointment as liquidator:<\/p>\n<ol>\n<li>An insolvency professional shall be eligible to be appointed as a liquidator if he, and every partner or director of the insolvency professional entity of which he is a partner or director is independent of the corporate person.<\/li>\n<li>An insolvency professional shall not be eligible to be appointed as a liquidator if he, or the insolvency professional entity of which he is a partner or director is under a restraint order of the Board.<\/li>\n<li>A liquidator shall disclose the existence of any pecuniary or personal relationship with the concerned corporate person or any of its stakeholders as soon as he becomes aware of it, to the Board and the Registrar.<\/li>\n<li>An insolvency professional shall not continue as a liquidator if the insolvency professional entity of which he is a director or partner, or any other partner or director of such insolvency professional entity represents any other stakeholder in the same liquidation.<\/li>\n<\/ol>\n<p>Proof of claim: A person, who claims to be a stakeholder, shall prove his claim for debt or dues to him, including interest, if any, as on the liquidation commencement date.<br \/>\nVerification of claims:<\/p>\n<ol>\n<li>The liquidator shall verify the claims submitted within thirty days from the last date for receipt of claims and may either admit or reject the claim, in whole or in part, as the case may be, as per section 40 of the Code.<\/li>\n<li>A creditor may appeal to the Adjudicating Authority against the decision of the liquidator as per section 42 of the Code.<\/li>\n<\/ol>\n<p>Manner of sale: The liquidator may value and sell the assets of the corporate person in the manner and mode approved by the corporate person in compliance with provisions, if any, in the applicable statute.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/gstguntur.com\/wp-content\/uploads\/2021\/10\/GST-Guntur.png\" alt=\"Voluntary Liquidation of Companies - CS Professional Study Material\" width=\"123\" height=\"13\" \/><\/p>\n<p>Question 12.<br \/>\nExplain the provisions regarding Proceeds of Liquidation and Distribution of Proceeds as per \u201cInsolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017\u201d.<br \/>\nAnswer:<br \/>\nProvisions regarding to proceeds of liquidation and distribution is as under:<br \/>\nDistribution:<\/p>\n<ul>\n<li>The liquidator shall distribute the proceeds from realization within six months from the receipt of the amount to the stakeholders.<\/li>\n<li>The liquidation costs shall be deducted before such distribution is made.<\/li>\n<li>The liquidator may, with the approval of the corporate person, distribute amongst the stakeholders, an asset that cannot be readily or advantageously sold due to its peculiar nature or other special circumstances.<\/li>\n<\/ul>\n<p>Completion of liquidation:<\/p>\n<ol>\n<li>The liquidator shall endeavour to complete the liquidation process of the corporate person within twelve months from the liquidation commencement date.<\/li>\n<li>In the event of the liquidation process continuing for more than twelve months, the liquidator shall hold a meeting of the contributories of the corporate person within fifteen days from the end of the twelve months from the liquidation commencement date, and at the end every succeeding twelve months till dissolution of the corporate person.<\/li>\n<\/ol>\n<p>Preservation of records:<br \/>\nThe liquidator shall preserve a physical or an electronic copy of the reports, registers and books of account referred to in Regulations 8 and 10 for at least eight years after the dissolution of the corporate person, either with himself or with an information utility.<\/p>\n<p>Question 13.<br \/>\nDescribe in brief the steps involved in Voluntary Liquidation process with the help of a flowchart.<br \/>\nAnswer:<br \/>\n<img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-22538\" src=\"https:\/\/gstguntur.com\/wp-content\/uploads\/2023\/04\/Voluntary-Liquidation-0f-Companies-CS-Professional-Study-Material-1.png\" alt=\"Voluntary Liquidation of Companies - CS Professional Study Material 1\" width=\"540\" height=\"731\" srcset=\"https:\/\/gstguntur.com\/wp-content\/uploads\/2023\/04\/Voluntary-Liquidation-0f-Companies-CS-Professional-Study-Material-1.png 540w, https:\/\/gstguntur.com\/wp-content\/uploads\/2023\/04\/Voluntary-Liquidation-0f-Companies-CS-Professional-Study-Material-1-222x300.png 222w\" sizes=\"(max-width: 540px) 100vw, 540px\" \/><br \/>\n<img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-22539\" src=\"https:\/\/gstguntur.com\/wp-content\/uploads\/2023\/04\/Voluntary-Liquidation-0f-Companies-CS-Professional-Study-Material-2.png\" alt=\"Voluntary Liquidation 0f Companies - CS Professional Study Material 2\" width=\"524\" height=\"811\" srcset=\"https:\/\/gstguntur.com\/wp-content\/uploads\/2023\/04\/Voluntary-Liquidation-0f-Companies-CS-Professional-Study-Material-2.png 524w, https:\/\/gstguntur.com\/wp-content\/uploads\/2023\/04\/Voluntary-Liquidation-0f-Companies-CS-Professional-Study-Material-2-194x300.png 194w\" sizes=\"(max-width: 524px) 100vw, 524px\" \/><\/p>\n<p><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/gstguntur.com\/wp-content\/uploads\/2021\/10\/GST-Guntur.png\" alt=\"Voluntary Liquidation of Companies - CS Professional Study Material\" width=\"123\" height=\"13\" \/><\/p>\n<p>Question 14.<br \/>\nDraft a Resolution for Voluntary Winding up.<br \/>\nAnswer:<br \/>\nRESOLUTION FOR VOLUNTARY WINDING UP RESOLUTION FOR VOLUNTARY WINDING-UP AS APPROVED BY THE MEMBERS OF ______________ (NAME OF THE CORPORATE PERSON) ATTHE EXTRA ORDINARY GENERAL MEETING HELD ON AT ______________ (DAY AND DATE) ______________ AT ______________ (PLACE)AT ______________ (TIME)<br \/>\nAPPROVAL OF VOLUNTARY LIQUIDATION OF THE COMPANY AND APPOINTMENT OF INSOLVENCY PROFESSIONAL AS LIQUIDATOR RESOLVED THAT pursuant to the provisions of Section 59 of the Insolvency and Bankruptcy Code, 2016 read with Insolvency and Bankruptcy Board (Voluntary Liquidation Process) Regulations, 2017, any other legislations governing voluntary liquidation and the provisions of the Companies Act, 2013 as may be applicable and subject to approval of creditors having atleast two-thirds in value of the debts of the corporate person within seven days of this resolution, the consent of the members of &#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;.. (name of the Corporate Person) be and is hereby accorded to initiate voluntary liquidation of &#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;.. (name of the Corporate Person). RESOLVED<br \/>\nFURTHER THAT Ms\/Mr. Insolvency Professional holding Registration Number being eligible to be appointed as liquidator pursuant to the provisions of Regulation 6 of the Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulation, 2017, be and is hereby appointed to act as the liquidator of &#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;.. (name of the Corporate Person) and subject to approval of creditors having atleast two-thirds in value of the debts of the corporate person within seven days of this resolution, on the remuneration of \u20b9 (Rupees in Words&#8217;) exclusive of costs of engaging other professionals, statutory expenses, expenses incurred on publication of notices, other incidental expenses and applicable taxes.<br \/>\nRESOLVED FURTHER THAT all the directors of the Company and Liquidator be and are hereby severally and\/ or jointly authorised to and take such steps and to do all such acts, deeds and things as may be necessary to give effect to the aforesaid resolution.<\/p>\n<p>Question 15.<br \/>\nDraft a format for Declaration of Solvency.<br \/>\nAnswer:<br \/>\nDECLARATION OF SOLVENCY<br \/>\nWe, Mr. X and Mr. P, only directors of ABC Private Limited do solemnly affirm and declare that we have made a full enquiry into the affairs of this company, and that having done so, we have formed the opinion that this Company has no debts or if claimed during the liquidation process, the company will be able to pay its debts\/ claims in full from the proceeds of assets to be sold in liquidation within a period of six months from the date of commencement of liquidation, and we append a statement of the Company&#8217;s assets and liabilities as at ______________ being the latest practicable date before the making of this declaration. We also solemnly affirm and declared that no business and no transaction of any kind has been carried for the period from ______________ till the date of the Board Meeting to be held on xx.xx.xx17 in which Declaration of solvency has been placed, and we make this solemn declaration believing the same to be true.<br \/>\nThe Declaration of solvency has been submitted to the Board Meeting not to defraud the Creditors. Government, any other company, firm and other person. Solemnly affirmed and declare at (PLACE) on (DATE), before me. ______________<br \/>\nMr. X<br \/>\nDIN: xxxxx<br \/>\nAddress:<br \/>\n______________<br \/>\nMr. Y<br \/>\nDIN: xxxxx<br \/>\nAddress:<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Chapter 8 Voluntary Liquidation of Companies &#8211; CS Professional Insolvency Law and Practice Notes is designed strictly as per the latest syllabus and exam pattern. Insolvency Concepts and Evolution &#8211; CS Professional Insolvency Law and Practice Study Material Question 1. WTC Ltd. had been incurring losses since inception and was decided to wind up. The &hellip;<\/p>\n<p class=\"read-more\"> <a class=\"\" href=\"https:\/\/gstguntur.com\/voluntary-liquidation-of-companies-cs-professional-study-material\/\"> <span class=\"screen-reader-text\">Voluntary Liquidation of Companies &#8211; CS Professional Study Material<\/span> Read More &raquo;<\/a><\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"spay_email":"","footnotes":""},"categories":[165],"tags":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/gstguntur.com\/wp-json\/wp\/v2\/posts\/22533"}],"collection":[{"href":"https:\/\/gstguntur.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/gstguntur.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/gstguntur.com\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/gstguntur.com\/wp-json\/wp\/v2\/comments?post=22533"}],"version-history":[{"count":3,"href":"https:\/\/gstguntur.com\/wp-json\/wp\/v2\/posts\/22533\/revisions"}],"predecessor-version":[{"id":22633,"href":"https:\/\/gstguntur.com\/wp-json\/wp\/v2\/posts\/22533\/revisions\/22633"}],"wp:attachment":[{"href":"https:\/\/gstguntur.com\/wp-json\/wp\/v2\/media?parent=22533"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/gstguntur.com\/wp-json\/wp\/v2\/categories?post=22533"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/gstguntur.com\/wp-json\/wp\/v2\/tags?post=22533"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}