INS1530 - Company liquidation: Compulsory winding up

Appointment of provisional liquidator

At any time following the presentation of a petition, but before the making of a winding up order, the petitioner may ask the Court to appoint a provisional liquidator under S135 Insolvency Act 1986.

When the Court orders the appointment of a provisional liquidator who may be either the Official Receiver or a licensed insolvency practitioner, the provisional liquidator takes custody and control of all the company’s property. This safeguards any assets for the benefit of all creditors.

A provisional liquidator remains in office until

• the Court agrees to release the provisional liquidator
• replaced by another person who is appointed provisional liquidator
• a liquidator is appointed following the making of an order to wind up the company.

If a provisional liquidator is in post and ICHU learns that

• a permanent liquidator is unlikely to be appointed, or
• other creditors are being paid, or
• after three months ICHU has not been notified of a permanent liquidator

ICHU will send the papers with a full report to EIS.

There are sometimes cases when a provisional liquidator will remain in office for a number of years, very much like a normal liquidation. This comes about because of the necessities of a particular business area; the insurance industry is the most frequent example.