XYZ Ltd. was intending to initiate voluntary liquidation proceedings. A declaration was made by way of affidavit by some of the directors of XYZ Ltd. stating that the company will be able to pay its debts in full from th

Section 59(1) of the Insolvency and Bankruptcy Code, 2016 provides that a corporate person who intends to liquidate itself voluntarily and has not committed any default may initiate voluntary liquidation proceedings under the provisions of the Code. A corporate person registered as a company has to meet the following conditions to initiate a Voluntary Liquidation Process: A declaration from the majority of the directors of the company verified by an affidavit stating they have conducted a full inquiry into the affairs of the company and have formed an opinion that either the company has no debts or that it will be able to pay its debts in full from the proceeds of assets to be sold in the Voluntary Liquidation; and That the company is not being liquidated to defraud any person. In this case it is stated that some of the directors signed the declaration and it is not coming out clearly that the directors who signed were in the majority. Moreover, the declaration relating to fraud is not there. Therefore, in this scenario, XYZ Ltd. cannot initiate Voluntary Liquidation proceedings in accordance with the Code.