Liquidation official receiver

There’s actually two provisional liquidators – your post suggests that there’s only one

The situation arises where there is an application by a creditor asking the Court for a winding up order of a company that owes money to that creditor (and, probably, others too)

The Court has three options available to it

1. Dismiss the petition
2. Postpone any decision until further enquiries have been made, and
3. Grant the petition

In the case of 1, that’s the end of the matter

In the case of 3, the Court will appoint the local Official Receiver to the position of provisional liquidator (number 1). That appointment is made where the creditor(s) or the Court feels that the company may try to put the company’s assets out of reach of any subsequently appointed (full) liquidator.

Following the gathering of further evidence, the matter goes back to Court for the Court’s decision and, again, the Court has three potential courses of action. And these are the same three as listed above

1. Dismiss the petition
2. Postpone any decision until further enquiries have been made, and
3. Grant the petition

This can be repeated and the same three options will continue until, eventually, number 2 will disappear and the Court will either dismiss or grant the petition

If the petition is granted, the liquidation procedure commences and the Official Receiver is appointed by the Court to the position of provisional liquidator (number 2)

(These numbers are not in any way official – they are simply my way of distinguishing the different roles paid by parties (particularly the Official Receiver) in the process of a liquidation under Court order)

One of the first things the provisional liquidator must do is call a meeting of the company’s creditors. At this meeting, the provisional liquidator will explain the situation about the company and its difficulties and explain that s/he has been appointed by the Court as a provisional liquidator. The ‘provisional’ element is that the creditors have the opportunity to approve or remove the Official Receiver and appoint their own nominee (who must be a Qualified Insolvency Practitioner (QIP))

So, whereas the appointment of Prov Liq number 1 was provisional upon the production of further evidence to support the petition for a winding up order, the appointment of the Prov Liq number 2 is provisional upon the approval by the creditors at that meeting

And, if the approval is given by the assembled creditors, the Official Receiver then becomes the liquidator and there’s no more provisionality about her / his position

Is that better?