Question

1. In the context of corporate insolvency:

1. Outline four grounds upon which the liquidator might resign in a members’ voluntary liquidation.

(ii) Explain four instances when the release of a liquidator becomes effective.(6 Marks

Answer 1

Answer (I) Liquidation takes place in a company when all the assets are sold to pay the creditors and business get closed. The company name will be there but its working status will declared as liquidation. The company name gets removed when the company gets dissolved after the few months of liquidation. There are two types of liquidation process the number one is solvent liquidation and another is insolvent liquidation.

The solvent liquidation takes place when the directors of the firms get retired or when the company decides to close the business due to its non performance and this is called as Members Voluntary Liquidation.

The insolvent liquidation takes place when the company's financial position is not good and able to fulfil the financial requirements when the company's assets is less then its liabilities they on the way of insolvency.

Four reasons upon which liquidator may resign in The members voluntary liquidation :

1.When there a conflict or dispute created between the shareholders and directors of the firm then its become difficult to continue the organisation.

2.When the company have to return excess capital to the shareholders through capital sharing and to divert the high rates of income taxes imposed on them.

3.When the head or the important partner of the firm gets retired then other partners are not interested in continuing the business.

4.The members voluntary liquidation is done importantly to gain the tax benefits.

Answer 2.when there is need of fair