The powers of provisional liquidators are generally as set out in the order appointing them.  In longer running provisional liquidations, this can lead to multiple trips to court by the provisional liquidators to extend or confirm powers.

In Re Versilia Solutions Limited[1] the High Court considered the scope of provisional liquidators’ powers in circumstances where, following appointment, they sold certain of the company’s assets without first having made an application to court to confirm that the order that appointed them covered that sale or for an order extending their powers if it did not.

Although determining that the powers given to the provisional liquidators gave authority to make the sale in this particular case (and therefore the court did not need to ratify it) the judge observed that the decision did not give provisional liquidators carte blanche to do the same in other cases, and the better way to proceed was to apply to court ahead of the sale.

Background

In this case provisional liquidators were appointed on 10 December 2025.   Pursuant to the terms of the order appointing them (the Order), the liquidators’ functions and powers were extended, in particular, as follows:

  • to do all such things as may be necessary or expedient for the protection of the Company’s property or assets
  • to do all things necessary or incidental to the foregoing functions, duties and powers

The Order also provided that the liquidators could do the following – but note the wording in bold

“locate, protect, secure, take possession of, collect and get in all property or assets (of whatever nature) to which the Company is or appears to be entitled in this country or abroad, including assets in the possession of a third party, such assets and property not to be distributed or parted with by the Provisional Liquidators until further order except pursuant to the functions hereby conferred”

Following their appointment the provisional liquidators received an offer from a third party to acquire certain aspects of the company’s business and assets.  The liquidators obtained valuation advice from Gordons Brothers, which, in short, said that the offer was the best received to date, exceeded their valuation and that they did not think there would be a better offer.

On 19 December 2025 the provisional liquidators sold the company’s assets to that third party, but did not, ahead of that sale make an application to the court to confirm that they had the authority to do so.

On 30 January 2026 the liquidators applied to ratify the sale but asked the court to consider that the sale had, in any event, been within the powers set out in the Order.

Decision

The judge decided that the sale did fall within the powers provided in the Order because had the liquidators not caused the company to enter into the sale they would not have been protecting, securing, collecting or even getting in the assets – which would have reduced in value given the company’s inevitable winding up.  

Although the Order provided that the Company’s assets and property were not to be distributed or parted with, the judge said that that wording did not prohibit the liquidators from converting the assets into cash

The only realistic option the liquidators had was to protect or secure the assets was to realise them for the best value they could obtain, and having done that they did not distribute or part with those assets. They had, he said, protected and secured the assets by converting them to cash which they continued to hold.

The judge stressed that this would not usually be the case where provisional liquidators are involved but the facts here were unusual.

Key Takeaways

The decision, was fact specific but is helpful for the views expressed by the judge that

  • A sale of assets by a provisional liquidator is not a usual step for provisional liquidators
  • If a provisional liquidator considers it is in the best interests of a company to be given particular powers, they should apply for them.
  • This judgment should not be seen by provisional liquidators and those advising them as a green light to undertake such sales without having been granted the necessary functions and powers by the Court in advance, either on appointment or by way of an urgent application to vary and extend those powers.
  • Should a similar situation arise in a future case, the expectation should be that a provisional liquidator would come back for directions in advance of causing the company to sell its business and assets (or part of them)

In saying that, the judge did not rule out that the court might consider a retrospective ratification application, but it is clear from the judgment that practitioners should not rely on the ability to do that and instead deal with matters upfront.

[1] [2026] EWHC 282 (Ch)