Striking out a Winding up Petition when there is a genuine dispute

Posted by Paul Caldicott on
Blake Morgan was recently successfully instructed by City Centre Resources Limited ("CCR") to resist a winding up petition.

Riverbank Hotels Limited (“Riverbank”) issued a winding up petition against CCR on 28 September 2012.

The petition stated that on 1 October 2010 Riverbank made a loan to CCR of £1,250,000 which was repayable on demand and of which £875,000 remained due.

The matter came before Mrs Justice Rose in the High Court on 4 December 2013.

In order to succeed, Riverbank needed to show that the debt was not disputed on substantial grounds. Even if a debt is undisputed, a court can refuse to make a winding up order if there are exceptional circumstances.

On behalf of CCR it was asserted that the debt was disputed and that there were also exceptional circumstances because the loan formed part of a wider course of conduct which amounted to unfair prejudice.

The Court held that there was ample evidence regarding the underlying transaction which the loan concerned, namely the sale of the Riverbank Plaza Hotel, to indicate that the loan was not made on terms that it would be repayable on demand.

Mrs Justice Rose held that there clearly was a "substantial dispute" between the parties as to why the whole of the proceeds of the sale of the Riverbank Plaza Hotel were not dealt with in the manner which appears to have been in the contemplation of the parties.  

She rejected the suggestion that these matters were extraneous to what was said to be a simple loan from one company to the other, holding that there was "plenty of documentary evidence to show that the loan that is now the subject of the winding up petition was part of a wider transaction."

Accordingly the petition was struck out and CCR was awarded its costs in the petition.

The team at Blake Morgan LLP has extensive experience of bringing and also defending winding up petitions. If you'd like to discuss a specific issue or case please call 029 2068 6181 to speak to Paul Caldicott.

See: Riverbank Hotels Limited v City Centre Resources Limited

About the Author

Paul is a specialist corporate restructuring and insolvency Solicitor in our Business Support & Insolvency team based in Cardiff.

Paul Caldicott
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029 2068 6181

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