Just and equitable petitions—deadlock in small family business

Just and equitable petitions—deadlock in small family business

What can we learn from a recent High Court decision where the court made a winding-up order on just and equitable grounds over a family-run company?

In the case of Re Brand & Harding Ltd  [2014] EWHC 247 (Ch), [2014] All ER (D) 136 (Feb), Mrs Justice Rose wound up a company on just and equitable grounds, pursuant to section 122(1)(g) of the Insolvency Act 1986 (IA 1986), where there had been a breakdown in mutual trust and confidence, which impeded the management of the company between its shareholders, two sisters.

What happened in the case?

The company subject to the petition was owned by sisters (the shareholders). The company ran a 242 acre farm. The petition was issued on the basis that the shareholders had reached a deadlock in that they contended that they could not agree on the management of the company. In addition there had been cross-accusations of misconduct, which had led to bitter acrimony and they could not agree on any matter relating to the future governance of the company. Therefore a winding-up petition was issued by the shareholders seeking an order to wind-up the company, pursuant to IA 1986, s 122(1)(g) on the grounds that it was just and equitable that the company be wound up.

What did the court say?

The court granted the order to wind-up the company on just and equitable grounds.

In considering whether or not it was appropriate to make the winding-up order, the court decided that the fact the company was a small/private company was not enough in itself to satisfy the legal test for winding-up on just and equitable grounds. There had to be something more for the court to make the order. Suc

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