High Court backs provisional liquidators’ pre-liquidation sale

The High Court has held that the joint provisional liquidators of Versilia Solutions Ltd were entitled, on the specific wording of their appointment and the urgent commercial circumstances, to complete a pre-liquidation sale of substantially all of the company’s business and assets without prior Court approval, finding that converting rapidly diminishing assets into cash fell within their protective mandate. The judge also confirmed that the Court has jurisdiction to retrospectively ratify an out-of-scope sale in an appropriate case, while cautioning that advance approval should ordinarily be sought.

Versilia, an airline buy-on-board services provider, faced a winding-up petition from the Avianca group following unpaid debts of approximately US$765,000. After a failed attempt to enter administration and the discharge of an injunction restraining advertisement of the petition,

Michael Leeds and Kristina Kicks of Interpath were appointed joint provisional liquidators (JPLs) with standard preservation powers under s 135 Insolvency Act 1986 on 10 December 2025. Within days, and against a backdrop of terminated contracts and deteriorating trading prospects, the JPLs accepted a £70,000 offer for most of the business and assets without first seeking Court approval. They later sought to ratify the sale.

Deputy High Court Judge Lance Ashworth KC held that, on the particular facts, the sale fell within the terms of the appointment order. Although provisional liquidators are ordinarily appointed to preserve assets rather than realise them, the Court found that converting rapidly diminishing assets into cash was a legitimate exercise of powers to “protect, secure, take possession of, collect and get in” company property. The prohibition on “distributing or parting with” assets did not prevent a value-preserving realisation where liquidation was inevitable and the company had effectively ceased substantive trading.

Importantly, the judge went on to consider, in obiter, whether the Court had jurisdiction to ratify the sale if it had been outside the JPLs’ powers. Drawing on authorities concerning receivers, retrospective permission in insolvency contexts, and Australian provisional liquidation jurisprudence, he concluded that the Court does have inherent jurisdiction to confirm and ratify acts of a provisional liquidator who has acted beyond the strict scope of his or her powers. Had the sale required authorisation, he would have retrospectively extended the JPLs’ powers and approved it.

The Court nevertheless issued a clear warning: this decision does not give provisional liquidators carte blanche to conduct pre-liquidation sales. Where a substantial asset sale is contemplated, an urgent application for directions should ordinarily be made in advance. The unusual facts here, including admitted insolvency, collapsed trading, and the absence of creditor opposition, justified the approach taken.

The company was subsequently wound up.

Read the decision here.

Kate Rogers of Radcliffe Chambers (instructed by Crowell & Moring UK LLP) acted for the joint provisional liquidators, Michael Leeds and Kristina Kicks of Interpath.

Steven Thompson KC of XXIV Old Buildings (instructed by Hausfeld & Co LLP) acted for Aerovias del Continente Americano SA Avianca et al.