[amp_mcq option1=”the creditor’s voluntary winding up” option2=”the compulsory winding up by tribunal” option3=”members voluntary winding up of a company” option4=”none of these” correct=”option1″]
The correct answer is: A. the creditor’s voluntary winding up
A voluntary winding up is a type of liquidation that is initiated by the company’s directors. There are two types of voluntary winding up: members’ voluntary winding up and creditors’ voluntary winding up.
In a members’ voluntary winding up, the directors of the company must file a declaration of solvency with the court. This declaration states that the company is solvent and that it is able to pay its debts in full within a specified period of time. If the court is satisfied with the declaration, it will order the winding up of the company.
In a creditors’ voluntary winding up, the directors of the company must call a meeting of the company’s creditors. At this meeting, the creditors will appoint a liquidator to wind up the company. The liquidator will then sell the company’s assets and distribute the proceeds to the creditors.
If the board of directors does not file a declaration as to solvency of the company, the voluntary winding up is called a creditors’ voluntary winding up. This is because the creditors are now responsible for winding up the company and they will appoint a liquidator to do so.
The other options are incorrect because they do not describe the situation where the board of directors does not file a declaration as to solvency of the company.
- Option B is incorrect because a compulsory winding up by tribunal is a type of liquidation that is initiated by the court.
- Option C is incorrect because a members voluntary winding up of a company is a type of voluntary winding up that is initiated by the company’s directors and where the directors file a declaration of solvency with the court.
- Option D is incorrect because it is not a valid option.