Q.What were "members' voluntary winding up" and "creditors' voluntary winding up" under the earlier legal framework, and how has the law changed today?

Under the older Companies Act framework, a solvent company used a "members' voluntary winding up", while an insolvent company used a "creditors' voluntary winding up", giving creditors more control; today both have been replaced by a single voluntary liquidation process under the IBC, available only to solvent companies.

This question tests whether a student can accurately describe the historical position while also being clear about how the law has since changed — an important honesty check on this topic.

Members' voluntary winding up (old law). This route was available when the company's directors could, in good faith, make and file a declaration of solvency, stating that the company would be able to pay all its debts in full within a specified period (not exceeding three years) from the commencement of the winding up. Because the company was solvent, the members retained substantial control: they appointed the liquidator by ordinary resolution, and creditors had a comparatively limited role, since their claims were, in any case, expected to be paid in full.

Creditors' voluntary winding up (old law). This route applied where the directors could not honestly make a declaration of solvency — that is, the company was, or might be, unable to pay its debts in full. Because creditors' interests were more directly at risk, the law gave creditors a much larger role: a meeting of creditors was held alongside the members' meeting, and creditors had the primary say in appointing the liquidator and in supervising the winding up through a committee of inspection. …

Presenting the members'/creditors' voluntary distinction as if it is still current law, without noting that both have been repealed and repla …