The following Restructuring & Insolvency practice note Produced in partnership with Kate Rogers of St Philips Chambers provides comprehensive and up to date legal information covering:
It is a long-established principle that winding-up proceedings should not be commenced where the petition debt is genuinely disputed on substantial grounds. Further, it is an abuse of process to seek to use the winding-up court as a debt collection agency.
However, the line between what constitutes a 'genuine dispute', and the circumstances which allow the court to exercise its discretion under section 125 of the Insolvency Act 1986 (IA 1986) to allow the winding-up proceedings to continue, is not always clear. This Practice Note looks at some of the situations that can arise in relation to dispute petition debts and sets out some of the principles that can be drawn from case law.
This Practice Note covers the following:
the basic principles applicable to winding-up proceedings based on disputed debts
the effect that a counterclaim can have on winding-up proceedings
how the court will deal with winding-up proceedings where the debtor company is balance sheet solvent, but a debt is due
the circumstances in which the court will allow winding-up proceedings based on a substantial dispute to continue, and
the typical directions the court will make on disputed winding-up proceedings
There is long list of authorities stating that a winding-up order will not be made if the debt demanded in a statutory demand or winding-up petition
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