Question

A voluntary winding up of a company in the case of which no 'Declaration of solvency' is required, is called ___________.

• A. Member's voluntary winding up
• B. Creditors voluntary winding up
• C. Winding up by court
• D. Voluntary winding up

Answer 1

Answer: (B)

Creditors voluntary winding up

Voluntary winding up is the process in which a company is unable to carry out it operations or the period for carrying the operations expires or if it is unable to meet its financial obligations. It can carry this process either by passing special resolution or by ordinary resolution. There are two kinds of voluntary winding up. They are;

1. Member's voluntary winding up.
2. Creditors voluntary winding up.

Under creditors voluntary winding up declaration of solvency is not required beacause the company first only becomes unable to pay the liabilities.