Court appoints provisional liquidator after relationship breakdown

In a recent decision of the Supreme Court of New South Wales (In the matter of C.V. Joint (Aust) Pty Ltd [2002] NSWSC 981), a provisional liquidator was appointed by the Court to a company primarily due to an ongoing dispute between the directors and shareholders. The case is a useful reminder of the relevant principles that apply when seeking to have a provisional liquidator appointed.

Key takeaways

• When deciding whether to appoint a provisional liquidator, the court will ask whether the company is likely to be wound up in due course and consider whether the balance of convenience favours the appointment.
• While not necessarily a part of the test the court applies in deciding whether to appoint a provisional liquidator, any significant breakdowns in working relationships within a company will be given weight and this can have a critical effect on the final decision.