Ann: Appointment of Provisional Liquidator to Subsidiaries, page-5

Information on the provisional liquidation process.

Unfortunately this process means that shareholders will get no return whatsoever with the only benefit of claiming a tax deduction to offset against share trading profits some time in the future when it is finalised.

The hope was always that a buyer would purchase the corporate shell which would have provided some return to shareholders whatever that would have been.


What is it?
The aim of provisional liquidation is to ensure that the assets of a company are
preserved prior to the making of a winding up order.
It differs from other winding up procedures in that it is not concerned with maximising
the assets available for distribution among creditors, but is simply an interim procedure
aimed at preserving the status quo until a winding up order is made.
It is also different from voluntary administration, as provisional liquidation usually
contemplates the winding up of the company. Voluntary administration, however, looks
to the possible survival of the company.

Who needs it?
Provisional liquidation is an attractive option where a winding up application has been
made and the parties are:
concerned that the assets of the company will disappear before the winding up order
is made; and/or
believe that it is necessary to shift control of the company away from the directors
in the interim.
The option of provisional liquidation will therefore be of interest to unsecured creditors
since it will act to preserve the assets that creditors may be entitled to once the
winding up order has been made.
However, it is also attractive to the company and its directors where there are concerns
that further liability will be incurred in the period between the winding up application​

and the winding up order, as control and liability effectively will shift from the directors to the provisional liquidators

Summary
Provisional liquidation is a means by which the company’s assets can be preserved
pending the completion of winding up proceedings. The appointment of a provisional
liquidator may be desirable where an application for a winding up order has been made
and creditors are concerned that the activities of the company and its directors will
result in available assets being dissipated in the interim period. Directors may also
find it a useful tool, particularly where they are concerned that they will be exposed to
liability in the interim period.
There are prerequisites for the appointment of a provisional liquidator. Consequently,
if it is believed that the appointment of a provisional liquidator is appropriate for the
circumstances, it is important to ensure that care is taken in approaching the courts and​

that the possible implications of the application are fully understood.