Sometimes there may be a point in which a company finds itself being wound up in the Supreme or Federal Court. Between the filing and winding up, the Court may decide to appoint a Liquidator as a Provisional Liquidator. The provisional aspect comes from the role of the Liquidator to act as a caretaker to preserve the company’s assets and maintain the status quo.
This generally occurs when the Court is satisfied that a company’s assets are in danger after the petitioning creditor/entity has applied for the appointment of a Provisional liquidator to protect the assets in the meantime.
There are a few key reasons as to why applying for a Provisional Liquidator is beneficial:
- If as a creditor you are concerned that your debtor company is at risk of losing assets or is making them unavailable while a winding up application is being heard.
- If as a shareholder of a company you are concerned that the directors are acting improperly, recklessly or in their own interests.
- If as a company there is a dispute between the directors or others, or if the company is insolvent and the directors prefer not to risk claims of insolvent trading before a liquidator is appointed.
Given that their role in the winding up of the company is a temporary (provisional one), the liquidator has a slightly reduced capacity to act including the inability to recover void transactions or pay dividends. However, the effect on the company is very similar to that of a normal liquidator in which the control of business and assets are transferred from the directors up until the application is dismissed or granted which turns the appointment into a court liquidation.
As a professional member of ARITA and an official liquidator, Jonathan Paul McLeod, is well renowned for his work in Brisbane, across all aspects of liquidation. To find out more information and benefit from the team’s expertise contact Jonathan Paul McLeod on (07)3004 0800 today.
Whilst a company is in the process of being wound up in the Supreme or Federal Court the petitioning creditor/entity may feel that there is a threat that the company's assets may be in danger, or that there may be ongoing internal conflicts or that the case is one of particular urgency. In this scenario the petitioning creditor/entity may apply to the Court for the appointment of a Provisional Liquidator to preserve the assets of the company. The role of the Provisional Liquidator is to maintain the company's status quo rather than commence the liquidation of the company's assets.
For more information please contact Jonathan Paul McLeod and the team at McLeod & Partners.