You should consider the possibility of placing a company into provisional liquidation if there is a risk that a company’s assets will be dissipated to the detriment of that company and a creditor or member of a company, a party can consider putting the company.

The power of a Court to appoint a provisional liquidator to a company stems from section 472(2) of the Corporations Act 2001 (Cth) (Act).

Pursuant to section 472(2) of the Act, a provisional liquidator of a company has either powers:

In the recent litigation involving Henclo Investments Pty Ltd (Henclo), the NSW Supreme Court confirmed that non-payment of a debt cannot be relied upon as evidence of insolvency if a winding-up application is filed on grounds other than failure to comply with a creditor’s statutory demand.

Background