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Amalgamation and merger (232 & 233)

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Rakesh Kumar

23 Points Posted on 21 March 2020

Obtaining approval of creditors before merger. What does creditor means ( whether all creditor including short term and long term)? If only long term whether it includes debt and loan from bank.

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Quick Summary

This discussion clarifies the requirements for obtaining creditor approval during company amalgamations and mergers. It explores the definition of 'creditor' in this context, questioning whether it encompasses all creditors, including those with short-term debts like bank overdrafts or suppliers, as well as long-term debts and convertible debt. The process involves dividing creditors into classes and obtaining consent from each class, potentially requiring board resolutions from corporate creditors.

CS Rashi Jain

Practicing Company Secretary @ RASHI JAI

1300 Points Posted on 21 March 2020

The creditors are divided into appropriate classes to achieve at settlement and each classes consent to scheme is obtained.
The consent Letter required to be given by Creditors (Secured / Unsecured) along with the Board Resolution (in case creditors is body corporate) as their consent to approve the scheme of amalgamation and to dispense with the meeting of the Creditors, in case they have no objection for the merger.