Litigation Team Successfully Oppose Winding Up Petition for client

Our litigation team successfully defended and opposed a winding petition for a company, having been instructed on a Monday night for a hearing on Wednesday. We opposed the winding-up petition as the debt was disputed and there was a genuine dispute. The dispute related to business rates.

The Law

The court’s powers are set out in section 125 IA 1986. The court may: Dismiss, Adjourn, Conditionally or unconditionally Make an interim order Or any other order that it thinks fit.

The court will generally not make a winding up order against a company where a debt is genuinely disputed on substantial grounds. Dispute must be real as opposed to frivolous (Commissioners of C&E v Arena Corporation Ltd [2004] EWCA Civ 371.

If there is a genuine dispute the court can carry out what is in effect a summary assessment of the debtor’s dispute to the petition (D&D Marketing Ltd [2002] EWHC 660 (Ch). The evidence must be sufficient to persuade the court objectively that there is a genuine dispute as to the company’s liability to pay the debt. If the Court is not willing to dismiss the Petition today, it can make directions for the issue to be considered and assessed at a future date. Where the petition is opposed on grounds that require consideration of evidence, the practice of the insolvency and Companies Court is to adjourn the hearing to allow it to be argued before the Judge in Chambers.

However, If a substantial dispute to the debt is established the court should not go on to consider the prospects of success of either party [Abbey National v JSF Finance & Currency Exchange Co Ltd [2006] EWCA Civ 328]. The dispute should be resolved outside the scope of insolvency proceedings. It is the Respondent’s position that there is a substantial dispute.

Other grounds to challenge include establishing that the company may or will be able to pay its debts in the future. [Minrealm Ltd [2007] EWHC 3078 (Ch)]. The court accepted that our client was solvent and in a position to pay any sum that is found to be due and owing. The court accepted that in light of the witness evidence and documents that we produced and our skeleton argument, a winding up order should not be made. We can assist on all insolvency matters including advising on presenting and opposing winding up petitions. In this case, we had less than 48 hours to prepare for the hearing and we are always able to act at short notice.