Why does a Court appoint a provisional liquidator?
An appointment of a provisional liquidator is usually made if there is a perception that the assets and affairs of the company are in jeopardy and that the ultimate effect of leaving assets in the hands of the company may be that the creditors and or shareholders will be disadvantaged. A court must be convinced that the assets of the company are in danger of being dissipated for the appointment to occur.
When can the Court appoint a provisional liquidator?
The Court has the power to appoint a provisional liquidator after the filing of an application for the winding up of a company and while the hearing of the winding up application is pending. The appointment gives interim control to a liquidator on a provisional basis until the final determination of the winding up application.
Who can make an application to have a provisional liquidator appointed?
- A creditor
- A shareholder
- The company
What is the role of the provisional liquidator?
The primary role of the provisional liquidator is to preserve the status quo pending the hearing of the winding up application.
The principal duty of a provisional liquidator is to take into custody and control all the property of the company with a view to protecting and preserving it and to report to Court.
How does a provisional liquidation end?
A provisional liquidation will come to an end either when a winding up order is made or when the application to wind up the company is dismissed or withdrawn.
A Court will terminate the appointment if the provisional liquidator has fulfilled his purpose.