IVA Glossary
P
Provisional Liquidator
The term "Provisional Liquidator" refers to that person who is appointed by the court with the purpose of safeguarding the assets and all the affairs of an enterprise after a winding-up petition is presented, but before the compulsory winding-up order is constituted. Practically, a Provisional Liquidator is a licensed insolvency practitioner responsible for dealing with companies after the Petition's presentation.
The appointment of such an insolvency practitioner is 'provisional' as the firm in question might not be wound up at the application's hearing, or another responsible person (an official liquidator) can be designated at that moment.
The appointment of a provisional liquidator has a caretaking role as this person is responsible for maintaining the status quo. Although provisional liquidators have limited powers, but they still have to protect the interests and needs of all parties who are involved in that case until the winding up order is ready. Official receivers are usually appointed to this position.
The reason behind people applying for a provisional liquidation is to protect the assets and affairs of the company in question. So if the assets of a firm are in danger, the Court appoints a provisional liquidator who will protect the whole company. Moreover, if there is some kind of internal dispute within a firm related to leadership for instance, an independent party is recommended to control the situation. Other reasons might be if a company becomes insolvent and requires an external administrator for this reason. In any case, provisional liquidators have the power to operate the business, close the company, as well as sell the company's assets. They might also call for Proofs of Debt, decide upon creditors' priority and they can also direct investigations. Nevertheless, a provisional liquidator does not have the power to pay dividends, neither has the power to recover void agreements.
The appointment of such an insolvency practitioner is 'provisional' as the firm in question might not be wound up at the application's hearing, or another responsible person (an official liquidator) can be designated at that moment.
The appointment of a provisional liquidator has a caretaking role as this person is responsible for maintaining the status quo. Although provisional liquidators have limited powers, but they still have to protect the interests and needs of all parties who are involved in that case until the winding up order is ready. Official receivers are usually appointed to this position.
The reason behind people applying for a provisional liquidation is to protect the assets and affairs of the company in question. So if the assets of a firm are in danger, the Court appoints a provisional liquidator who will protect the whole company. Moreover, if there is some kind of internal dispute within a firm related to leadership for instance, an independent party is recommended to control the situation. Other reasons might be if a company becomes insolvent and requires an external administrator for this reason. In any case, provisional liquidators have the power to operate the business, close the company, as well as sell the company's assets. They might also call for Proofs of Debt, decide upon creditors' priority and they can also direct investigations. Nevertheless, a provisional liquidator does not have the power to pay dividends, neither has the power to recover void agreements.
