Aerovías Del Continente Americano SA Avianca & Ors v Versilia Solutions Limited (in Provisional Liquidation)

A provisional liquidator’s powers depend on the appointment order and the facts. Protecting company assets may, in an unusual and urgent case, require selling them where their value would otherwise diminish. A restriction against distributing or parting with assets does not prevent conversion into cash where that is necessary or expedient for their protection.

The court has jurisdiction to give directions and, where appropriate, retrospectively extend a provisional liquidator’s functions and ratify an unauthorised sale. Such relief is exceptional. Provisional liquidators should ordinarily seek express authority before selling a company’s business or assets.

The petitioners sought the winding up of Versilia Solutions Ltd. The company was insolvent and had ceased, or was about to cease, its substantive trading. Joint provisional liquidators were appointed under section 135 of the Insolvency Act 1986.

The joint provisional liquidators subsequently sold much of the company’s business and assets without first seeking an express power of sale or directions from the court. They later applied for ratification. The court considered whether the sale was already authorised by the appointment order, whether retrospective authority or ratification was available, and whether the company should be wound up.

1. Sale within existing powers. The sale fell within the functions and powers conferred by the 10 December order. On the particular facts, selling the assets was the only realistic means of protecting and securing their value. The assets were effectively perishable because delay would have reduced their value. Conversion into cash did not amount to prohibited distribution or parting with the assets.
2. The restriction in paragraph 6(a) of the order was expressly qualified by the functions conferred. In any event, the sale was necessary or expedient for protecting the company’s property and assets, and was necessary or incidental to the provisional liquidators’ functions.
3. The power in paragraph 7(d), permitting disposal of assets in the ordinary course of business, did not authorise the sale because a sale of the majority of the business and assets was not in the ordinary course of business.
4. Directions and retrospective authority. Provisional liquidators may seek directions under an express liberty-to-apply provision and under the court’s supervisory jurisdiction. Section 168(3) of the Insolvency Act 1986 does not apply because a company with a provisional liquidator is not being wound up by the court. Where a sale is outside the appointment order, the court nevertheless has jurisdiction to confirm or ratify it retrospectively.
5. Exercise of discretion. Ratification would be appropriate where, on proper advice, a rapid sale is the only way to preserve the company’s assets or their value, the court would have authorised the sale prospectively, and there is no material prejudice to creditors or other interested parties. The court should not treat the absence of prior authorisation as a reason to refuse relief in such circumstances.
6. The decision was confined to the unusual facts and urgency of the case. It was not authority for provisional liquidators to sell a company’s business or assets without obtaining the necessary functions and powers in advance. In a similar future case, an urgent prospective application should be made.
7. The company was insolvent and the relevant EU insolvency regulation did not apply. The company was therefore wound up under the Insolvency Act 1986. The petitioners’ costs of the petition were ordered to be paid out of the company’s assets.

The judgment describes interlocutory steps in the same proceedings. On 10 December 2025 HHJ Klein dismissed the administration application, discharged the injunction, directed advertisement of the petition and appointed joint provisional liquidators under section 135 of the Insolvency Act 1986. The present court declared that the subsequent sale was within their powers and, alternatively, ratified it retrospectively.