What Happens When a Company is Placed Under Provisional Liquidation.
In South African law, provisional liquidation is a legal process whereby a company is placed under the control of a provisional liquidator, who is appointed by the court. The provisional liquidation process is typically initiated when there is a concern that the company is unable to pay its debts or is in financial distress, and it is meant to provide protection to the company's assets and to its creditors.
During the provisional liquidation process, the provisional liquidator takes control of the company's affairs and works to identify the company's assets, liabilities, and financial situation. The provisional liquidator may also work to recover any assets that have been improperly or fraudulently transferred out of the company.
The provisional liquidation process is a temporary measure that is designed to provide breathing space to the company and its creditors while a final decision is made about the company's future. At the end of the provisional liquidation process, the court may order that the company be liquidated, restructured, or returned to its directors if the financial situation has improved.
It's important to note that provisional liquidation can have significant consequences for the company and its stakeholders, including employees, shareholders, and creditors. If you are involved with a company that is in provisional liquidation, it's important to seek the advice of a qualified legal professional to understand your rights and obligations.
This is a simple summary. Please refer to a legal representative for further information.