Meaning
Securing corporate assets while a liquidation application is pending is crucial to prevent dishonest directors from asset-stripping the company. Under the provisions of section 95, the court may appoint an interim liquidator before a full winding-up order is made. This temporary officer takes immediate control of the company’s business and assets to preserve them until the final hearing.
It is a highly protective remedy used when there is a risk that assets will be dissipated or records destroyed.
Interim Relief
This power is designed to maintain the status quo during the litigation process. An appointment under section 95 is limited in scope and does not involve the permanent winding up of the company. The interim liquidator acts as a custodian until the court decides the main application.
Creditor Protection
The remedy protects the general body of creditors from being disadvantaged by unilateral director actions. When an interim liquidator is appointed under section 95, a stay of proceedings is triggered, preventing individual creditors from pursuing separate lawsuits. This keeps the company’s assets together for an orderly distribution.
Evidentiary Standard
The applicant must present strong evidence of risk to succeed under this section. To obtain an order under section 95, the creditor must show that the company’s assets are in jeopardy or that the directors are acting dishonestly. A mere disagreement over a debt will not satisfy the court.
