Procedure of creditors’ voluntary winding-up: 

(1) The creditors of a company would be mainly concerned if the company arrives at the decision that it should wind -up itself because of its inability to meet its liabilities. The company in that case must call a meeting of the creditors to be held on the day or the day next following the next date on which there is to be held a general meeting of the company at which the resolution for voluntary winding-up is to be proposed [Section 500 (l)].

(2) Notice of the meeting is to be sent to the creditors and it must also be advertised once at least in the Official Gazette and in two newspapers circulating in the district where the registered office of the company is situated [Section 500(2)].

At the meeting of the creditors, the Board of Directors must cause a full statement of the company’s affairs, and a list of the company’s creditors and the estimated amount of their claims, to be laid before the meeting of the creditors. The Board of directors also must appoint one of their members to preside over the said meeting [Section 500(3)].

If the meeting of the company for passing the winding-up resolution, is adjourned and at the adjourned meeting the resolution is passed, then any resolution passed at the creditors meeting, though prior in date to that for winding-up would nevertheless be valid and effective as if it had been passed after the passing of the winding-up resolution [Section 500(5)]

The resolution passed at the creditors’ meeting shall be notified by the company to the Registrar within ten days of the passing thereof (Section 501).

In a creditors voluntary winding-up, the creditors and the members appoint a liquidator in their respective meetings. If different persons are nominated, the creditors’ nominee shall become the liquidator. However, any director, member or creditor may, within seven days after the nomination has been made by the creditors, apply to the Court for an order that the company’s nominee shall be the liquidator instead of, or jointly with, the creditor’s nominee.

(3) If a vacancy occurs by death, resignation or otherwise in the office of a liquidator (other than the one appointed by or by the direction of the Court) the creditors in general meeting may fill in the vacancy (Section 506).

(4) The creditors at the first meeting under Section 500, or at a subsequent meeting may appoint a Committee of Inspection consisting of not more than five persons [Section 503 ]. The members of the Committee are to be nominated by the company at a general meeting. If any of the nominees is not acceptable to the creditors, they may by resolution choose any person in his place. However, the Court is empowered to direct otherwise.

(5) The Committee of Inspection and, if there is no such Committee, the creditors, may fix the remuneration of the liquidator. If they do not fix the remuneration, the Court would do so (Section 504). Section 465(2) to (10) applicable to Committee of Inspection appointed in a compulsory winding-up will also apply to the Committee of inspection under Section 503, subject to such rules as may be made by the Central Government [Section 503(5)].

(6) Where the voluntary winding-up continues for more than a year, the liquidator must call a general meeting of the company, as in the case of members’ winding-up as well as meeting of the creditors at the end of the first year of the commencement of winding-up within three months from the end of each year or such longer period as the Central Government may allow, Such a meeting also must be called at the end of each succeeding year in the same manner. The liquidator must lay before the meeting an account of his acts and dealings and of the conduct of the winding-up during the preceding year and also a statement in the prescribed form (Section 508).

(7) As soon as the affairs of the company have been wound-up, the liquidator shall: (a) make-up an account of the winding-up showing how the winding-up has been conducted and the property of the company has been disposed of, and (b) call a general meeting of the company and a meeting of the creditors for the purpose of laying the account before the meeting and giving any explanation thereof.