Provisional liquidation

11 January 2012

It is well accepted that if an applicant for the appointment of a provisional liquidator can establish that the directors and/or shareholders might dissipate the assets, disadvantaging the creditors should the company eventually be wound up, he or she is likely to succeed. In this regard ‘dissipation’ does not just mean the directors and/or others making away with the assets, it can also refer to the fact that there is a serious risk that the assets may not continue to be available to the company: The Commisioners for HMRC v Rochdale Drinks Distributors Ltd [2011] EWCA Civ 1116 at [99]. This could be where, notwithstanding the presentation of a petition, the directors continue to trade a loss-making company without securing an order under s 127 (at [99]).

See further: Commentary to Rule 135 of the Insolvency Act 1986 in Insolvency Legislation: Annotation and Commentary Online, Louis Doyle and Andrew Keay (2012).


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