Creditors' voluntary liquidation

It’s correct that a members’ resolution needs to be passed / approved to commence any voluntary liquidation

But ask yourself this! How do the members know when and where to attend a meeting for the purposes of passing the resolution?

The directors convene that meeting and it’s the directors that decide to propose the resolution at the meeting

So can you see? It’s the directors that start the process whereby a company enters into a creditors’ voluntary liquidation

However! (And now it gets silly!). The company could not enter a creditors’ voluntary liquidation if the company doesn’t exist so could you argue that it’s the promotors who created the company that started this ball rolling!

I agree that it’s a tricky question (forget that bit about promotors!) but it must surely be the directors that start the process

OK?

No – I don’t believe that that’s accurate

Directors (you are correct) are in the best position to determine whether or not a company is viable

They can take the steps necessary to convene a meeting of the members (without first getting members’ approval) and, at that meeting, the board will tell the members that the company is in deep financial trouble and the directors propose a resolution for the members’ approval that the company, by reason of its debts, can no longer continue as a viable entity and that the company should seek a voluntary winding up

However, because it’s unlikely that the creditors will be paid in full within 12 months of the passing of that resolution, the winding-up must be a creditors’ winding up and not a members’ winding up

Is that better?

You’re welcome