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Sometimes, when a winding up is on the cards for a company it is not enough to simply let matters run their course in the usual way. That is especially so when there is an urgent need to preserve the assets of a company, and to have its affairs investigated. In those circumstances it may be necessary to appoint a provisional liquidator.
Here are some topics:
- Why appoint a provisional liquidator?
- When, in terms of timing, do you appoint a provisional liquidator?
- What do you need to show to appoint a provisional liquidator?
- What is the procedure?
- What can a provisional liquidator do?
- How do you oppose an application?
Why appoint a provisional liquidator?
- When you urgently need to preserve the assets of a company so that its affairs can be investigated with a view to obtaining a recommendation about whether it should be wound up.
When, in terms of timing, do you appoint a provisional liquidator?
- Usually, this is done after a winding up application is filed i.e. the company looks to be insolvent and there is a risk that assets are going to be dissipated.
What do you need to show to appoint a provisional liquidator?
- The plaintiff must have standing to bring the application e.g. a creditor
- There must be some proof of insolvency (or another basis for a winding up)
- There has to be urgency in the sense that if you wait then the assets will be placed out of the reach of the creditors.
What is the procedure?
- As the court makes the orders it is necessary to use the appropriate court process, and take preliminary steps required such as considering the need for an undertaking as to damages.
What can a provisional liquidator do?
- the provisional liquidator takes over from the directors, and they lose their powers in the sense of them being suspended.
- there are some things that a provisional liquidator cannot do e.g. distribute assets.
How do you oppose an application?
- there are a number of strategies that can be used such as saying that the plaintiff did not make out each of the elements required to obtain the relief.
How we help?
- when a company looks to be insolvent and it appears that the directors are dissipating assets then there may be a need to approach the court to appoint a provisional liquidator.
- we can also advise on such rights as there may be for opposing an application to appoint a provisional liquidator.
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