Provisional Liquidation - rare in England, common in Scotland

Provisional Liquidation might be a rare term for English businesses but for Scottish ones it's quite common - we explain what it is here.

Asset Backed Management, an unauthorised investment company selling asset investment opportunities to the public, has been placed into provisional liquidation at the High Court

 

The Government made the application at the hearing on behalf of The Secretary of State for Business, Energy and Industrial Strategy, which the company and its representatives failed to attend despite being given 13 days notice. 

 

The company promoted their business through their website which claimed that it could introduce their investors to opportunities in corporate bonds, commercial property, property bonds and renewable energy bonds. Despite claims to the contrary on the website, the company would contact prospective customers through cold calling. 

 

Both of these activities were in breach of financial regulations. Additionally they are not and never have been regulated by the Financial Conduct Authority (FCA). They have not employed an FCA-authorised person nor had their marketing materials approved by an FCA-authorised person. 

 

The Official Receiver has been appointed as the provisional liquidator and now has the responsibility to protect assets in the possession of or under the control of the company pending the determination of the petition. 

 

The petition to wind up the company in full will be heard in the High Court on May 7th 2019. 

 

What is Provisional Liquidation?

 

We have discussed what Provisional Liquidation is in an earlier post which you can read here. 

 

While still being relatively rare in England for the reasons we’ve illustrated, the practice of provisional liquidation is much more widespread in Scotland. 

 

One reason is that as the Official Receiver does not take appointments in corporate cases, the provisional liquidator will always be a private insolvency practitioner.  

 

There doesn’t need to be any whiff of impropriety for one to be appointed, it can simply be the most efficient way of preserving the assets of a company, such as when the company is still actively trading and the director wishes to step away from the business. This is also equally relevant to void dispositions or reversible disposals of company assets, after the winding up petition has been presented. 

 

Provisional liquidators can also streamline the process known as pre-pack administration, where the assets are pre-packaged for a quick sale. The liquidator can seek powers from the court to market the business for sale and seek further directions to rubber stamp any pre-pack sale if it is in the best interests of the creditors. 

We have overseen many satisfactory insolvency cases and winding-up orders on both sides of Hadrian’s Wall. 

Contact us for a free consultation today and we can get to work with you at your earliest convenience.