Bold petitioning creditors beware

Bold petitioning creditors beware

Is a winding-up petition bound to be struck out where there is a clash of evidence, and notwithstanding a challenge to the credibility of the company’s evidence? Elaine Palser of 9 Stone Buildings considers the recent decision of Gabriel Moss QC (sitting as a deputy judge of the High Court) in Re A Company.

Original news

Re A Company [2016] EWHC 1046 (Ch), [2016] All ER (D) 103 (May)

The Companies Court dismissed the petitioners’ petition for the winding-up of a company where, among other things, the company had produced evidence that was, on its face, sufficient to raise a bona fide dispute as to the receipt of three payments. The evidence showed that the debt was being disputed bona fide and on substantial grounds.

What was the background to the hearing?

The petitioners presented a winding-up petition, stating that the company was indebted to the petitioners in the sum of £270,000 odd in relation to some 25 agreements. The petition stated that the company was insolvent because the petitioners had, by a letter, demanded payment of the debt but the company failed to make payment. In correspondence, prior to presentation of the petition, the company had sought clarity as to the various bases for the sum claimed, but to little avail.

The company obtained a without notice injunction restraining advertisement of the petition pending a hearing on notice to strike out the petition on the basis the debt was disputed on bona fide and substantial grounds. On the return date the petitioner accepted that there was a bona fide and substantial dispute in respect of 22 of the agreements, but sought to argue that the petition should proceed on the basis of £100,000 odd outstanding in respect of three of the agreements. The company claimed it had never been paid by the petitioner in relation to those three agreements, and therefore the

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About the author:

Stephen qualified as a solicitor in 2005 and joined the Restructuring and Insolvency team at Lexis®PSL in September 2014 from Shoosmiths LLP, where he was a senior associate in the restructuring and insolvency team.

Primarily focused on contentious and advisory corporate and personal insolvency work, Stephen’s experience includes acting for office-holders on a wide range of issues, including appointments, investigations and the recovery and realisation of assets (including antecedent transaction claims), and for creditors in respect of the impact on them of the insolvency of debtors and counterparties.