For a troubled insurer, the appointment of a provisional liquidator has, in general, until now been used to avoid putting the company into liquidation, a process that for various reasons is not usually considered to be of benefit to the creditors of an insurance company.
The appointment of the provisional liquidator provides the necessary stay of proceedings against the company, allowing the development of a scheme of arrangement under s425 of Companies Act 1985, usually the most appropriate route for managing the affairs of an insolvent insurance company and enabling distributions to its creditors.
