Provisional liquidation is an emergency procedure governed by the Insolvency Act 1986 and the Insolvency Rules 1986.
A provisional liquidator can be appointed by the court only after a winding up petition has been presented.
Provisional liquidation may be appropriate where there is a real concern that, between the presentation of the winding up petition and the making of a winding up order by the court, the company’s affairs will not be properly conducted, or its assets will be dissipated. The main reason for appointing a provisional liquidator is to:
- Protect assets.
- Safeguard the company’s records.
- Investigate the company’s affairs only in so far as it is necessary to discover, protect and recover assets.
Once a creditors meeting has been held the Provisional Liquidator will make way for the Full Liquidator to take over. Although in practice it is not uncommon for them to be one and the same.
Specific advice should be obtained before taking action, or refraining from taking action, on any of the issues covered above.
For further information, please contact one of our Partners who will be able to assist you.