As the creditor of a company that is failing to make payment of amounts owed, the process you have to follow, to have liquidators appointed in relation to that debtor company, can be slow and frustrating.
It will be even more frustrating, and worrying, if you have concerns about what will happen with the assets of the debtor company while the process takes place?
There is an option, pursuant to Sections 241(4)(d) and 246 of the Companies Act 1993 (“the Act”) to have an interim liquidator appointed by the Court to take control of and preserve those at-risk assets.
In the normal course of events, when liquidating a debtor company, the process starts with the serving of a statutory demand giving 15 working days for the debtor company to make payment or enter into an arrangement to settle.
If the statutory demand is not satisfied, then an application must be filed in the High Court to have the company placed into liquidation and requires the service of those documents on the debtor company. Public notice of the application has to be given in the local newspaper and, depending on the Court the application is filed in, it may be up to a month before the application is heard.
Rather than go through the normal process of making demand and then following up with liquidation proceedings, a creditor can, if the circumstances justify it, make an application to the High Court for the appointment of a liquidator to the debtor company pursuant to section 241(4)(d) of the Act, on the basis that it is just and equitable to do so.
If there are justifiable concerns about the potential for the assets of the debtor company to be dissipated in the period between the time of the application being filed in the High Court to have debtor company liquidated and the date for the hearing of that application, the applicant creditor can also apply to the Court, pursuant to section 246 of the Act, to have an interim liquidator appointed.
The Court may appoint an interim liquidator if it is satisfied that it is “necessary or expedient for the purpose of maintaining the value of assets owned or managed by the company”. The Court impose some restrictions on the interim liquidator, such as not being able to make distributions, until the full liquidation order is made at the hearing date.
If you are looking to have a debtor company liquidated but have serious concerns about what will happen to assets in the intervening time, an application for the appointment of the interim liquidator can be made without notice to the debtor company and such an appointment should ensure that the risk of the debtor company’s assets being dissipated, before the full hearing of the liquidation proceedings can be held, is greatly reduced.
If you would like any information about appointing an interim liquidator please contact us.