The appointment of a provisional liquidator.
This is probably the most unusual and dramatic remedy available to an Applicant. It is made pursuant to Section 135 of the Insolvency Act 1986 in respect of a company. It is an adjunct to winding up proceedings. An order appointing a provisional liquidator maybe made in circumstances in which pending the hearing of the winding up petition there is a significant risk that the Respondent’s assets will be dissipated and or that it will continue some fraudulent trading activity or that its books and records will be destroyed.
It is a very serious application indeed, as the appointment of a provisional liquidator over a company is very likely to have a terminal effect on the company’s trading life. A creditor in making an application must show that firstly he is likely to obtain a Winding-Up Order on the hearing of a Petition and secondly, in all circumstances it is right that a provisional liquidator be appointed.
A provisional liquidator must also be proposed to the Court, which is normally an accountant-qualified Insolvency Practitioner. This appointment serves only to protect the assets until the company is wound-up and does not always provide security for any assets in the short-term.
It is rare for creditors to seek such appointments, as the benefit of the appointment of a provisional liquidator lies with all creditors (and the Applicant’s claim will be treated equally against any assets recovered net of the fees of the subsequently appointed liquidator).
European Account Preservation Order
An Applicant may also consider the possibility of a European Account Preservation Order (“EAPO”). This is a new type of regime produced by the European Commission to enable a Court in one EU member state to make an Order freezing the bank account of a Defendant in a different EU member state.
Accordingly, this option only remains available between EU member states and may not apply to all European countries and is not available outside of Europe. There are also some limitations on the type of claim that may support an EAPO, it being only relevant to monetary claims.
The EAPO can only be used to freeze bank accounts and cannot be used against any other assets which the Applicant may be aware of. Equally, the rights of an overseas bank to set-off sums against account balances (for example where it operates more than one account in the Defendant’s name, it may set off an overdrawn account against the account subject to the EAPO).
Delivery up orders
These are Orders available under the Civil Procedure Rules 1998 (as amended) PD25A, which allows the Court to require that specified items are provided requiring delivery-up of such assets.
A Delivery-Up Order may be made where Orders are simultaneously being executed at the Defendant’s premises (for example Freezing Orders) and may be ancillary to the main order obtained. The Court must include all such ancillary orders as part of a Delivery-Up Order for the protection of third parties, including the Applicant. Such ancillary orders may relate to the manner of execution, the physical safeguard of assets and strict adherence to the terms of the order. Such an Order may also require a cross-undertaking by the Applicant.
Charging Orders
These are Orders normally sought against property of the Defendant once judgement has been obtained. They are very useful for circumstances where lengthy proceedings have led to obtaining judgement but the Defendant refuses to pay the judgement liability (often by reason of an inability to pay the debt).
A Charging Order will normally be relatively straightforward to obtain if judgement has been granted in your favour and no steps have been taken to appeal or revoke the judgement (an appeal must be filed within 21 days).
In such the Applicant should consider a Charging Order against any known property assets as soon as possible. The expediency of dealing with this is vital, as one common tactic often employed is to register a charge against a property to eliminate any equity (and thus make the effectiveness of a Charging Order pointless).
