WINDING UP

Creditors VWU
Sec 254 (1)(b) - Pass special
resolution
- Declaration of Insolvency
Sec 260 - Summon creditors for
meeting
Sec 260 - Meeting at same day @ next
day
Sec 260 - Creditors may nominate
liquidator
Sec 256 Stop bi
Sec 257 - Declaration of insolvency !ill
be
find out !"ile t"e directors
prepare t"e declarations

Meaning
#inding up or liquidation is a process by which
company assets are collected, its debt paid
and the surplus if any, distributed among its
members$
%ntil t"e process completed t"e company
remains in existence as a legal entity$
Types of Winding Up
Sec 211 Mode of !inding up eit"er by&
Volntary Winding Up
Members voluntary #inding %p
Directors voluntary #inding %p
Co!plsory Winding Up
'rder by Court
Me!bers VWU
Sec 254 " !"en t"e period expired
Sec 254 (1) (a) " Particular ob(ect in
Mo) @ )o) !as lapse$
Sec 254 (1) (a) - Pass ordinary resolution
Sec 257 (1) - Declaration of solvency
Sec 257 (1) " Director prepare
declaration
Sec 254 (1) (b) - Pass special resolution
- Insolvent t"us creditors *#%
Sec 25# - Member appoint liquidator
Sec 255 (6) - Commencement of !inding
up upon passed of
resolution$
Co!plsory Winding Up
Sec 217 - +ist of Person can apply Court
order for compulsory !inding up
Sec 21# (a) $ (n) ,round of !inding up
Sec 21# (e) - %nable to pay debt
Sec 21# (2) - fail to comply statutory demand
Sec 21# (2) (a) -M .// indebted
%&a!ple
Sec 217 (1) (b) - creditors petition to Court
Sec 21# (1) (e) - %nable to pay debt
Sec 21# (2) (a) - Special resolution resolved by t"e
Court
Tested
Sec 21# (1) (f) - Director acted for o!n interest
Sec 21# (1) (i) - Court of opinion (ust 0 equitable
Cort of 'pinion (st ) %*itable
Deadloc1
2raud 0 misconduct
%nac"ieved company ob(ect
Contravention in understanding
%ffe+t of Winding Up
Creditors
Company
Company 3mployees
-eceivers
Winding Up
#inding up or liquidation is a
process by which company
assets are collected, its debt
paid and the surplus if any,
distributed among its members$
%ntil t"e process completed t"e
company remains in existence as
a legal entity$
Me!bers
Volntary Winding Up
4$ Declaration of solvency by
directors$
5$ Special resolution by members
in t"e company6s ,eneral
Meeting$
7$ Members appoint liquidator
8$ Stop business except !"at is
necessary$
.$ Director lose t"eir po!er
9$ +iquidator fulfil duties :fixed all
floating assets; list; realise;
pay<
=$ Deregistration
Creditors
Volntary Winding Up
4$ Special resolution t"at t"ere is
no solvency means company6s
in insolvency$
5$ Members call creditor meeting$
7$ Creditor appoint liquidator if not
satisfied !it" appointment
made by member @ company$
8$ Stop business except !"at is
necessary$
.$ Director lose t"eir po!er
9$ +iquidator fulfil duties :fixed all
floating assets; list; realise;
pay<
=$ Deregistration
Co!plsory
Winding Up
4$ Insolvent due to statutory
demands$
5$ )pplication made by t"e
creditor @ company$
7$ Court may appoint provisional
liquidator$
8$ >race$
.$ Court appoint liquidator @
official receiver$
9$ +iquidator fulfil duties :fixed all
floating assets; list; realise;
pay<
=$ Deregistration
Co!plsory
Winding Up
,'t-er .ronds/
4$ ,round under Sec$ 54?
5$ )pplication made to t"e Court$
7$ Court appoint provisional
liquidator$
8$ Court order$
0riority 'f
Co!pany 1ssets
4$ Preferential creditor under Sec$
4@4
5$ Secured creditors under Sec$
5@5
7$ #inding up expenses
8$ %nsecured creditors
.$ Members
9$ Aote if t"ere is fixed 0 floating
c"arge; priority !ill be given to
fixed c"arge U23%44 floating
c"arge !as created earlier and
provide restrictive clause
:negative pledge<$
Cort 'f 'pinion (st )
%*itable
4< Deadloc1
5< 2raud 0 misconduct
7< %nac"ieved company
ob(ect
8< %nderstanding
contravention