Corporate Insolvency   >  Provisional Liquidation

In Scotland, a provisional liquidator can be appointed by either creditor(s), director(s) or the company (ie the shareholders).

The provisional liquidator’s principle duty is to safeguard the company’s assets.

If he has been appointed by a creditor e.g. as part of a debt collection exercise, the provisional liquidator will establish whether the company is solvent and if there are sufficient funds to make payment of the petitioning creditor’s debt, together with costs. If settlement of the petitioning creditor’s claim is made, the appointment of provisional liquidator can be withdrawn.

The appointment of a provisional liquidator can also be the first step of a full liquidation and is used where a company may continue to trade under the provisional liquidator’s supervision in order to explore a sale as a going concern, or if there is concern that assets may dissipate in the period between presentation of the liquidation and the appointment of an interim liquidator.

A provisional liquidator can be appointed almost immediately if it is a petition presented by the directors and such appointment can endure for many months if deemed necessary.

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