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Distinction Between Members’ and Creditors’ Voluntary Winding Up
The main differences between the two are as follows:-
- A members’ voluntary winding up results where, before convening the general meeting of the company at which the resolution of winding up is to be passed, the majority of the directors file with the Registrar a statutory declaration of solvency. A creditor’s voluntary winding up is one where no such declaration is filed.
- In a members’ voluntary winding up, the creditors do not participate directly in the control of the liquidation, as the company is deemed to be solvent; but in a creditors’ voluntary winding up, the company is deemed to be insolvent and, therefore, the control of liquidation remains in the hands of the creditors.
- There is no meeting of creditors in a members’ voluntary winding up; whereas in a creditors’ voluntary winding up, meeting of creditors have to be called at the beginning.
- In a members’ voluntary winding up, the liquidator can exercise some of his powers with the sanction of a special resolution of the company; but in a creditors’ voluntary winding up, he can do so with the sanction of the Court or the Committee of Inspection or of a meeting of creditors.
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