RWK Goodman successfully rescind a client’s winding up order
The company had received negligent advice from their insolvency advisors and were therefore not represented at the Winding Up hearing which led to a Winding Up (Liquidation) Order being made against them as a result. Our Milan Kapadia, senior associate in our dispute resolution department based in London, was instructed by the director of the company to advise in respect of an application to rescind and therefore cancel the Winding Up Order. Such applications are uncommon and very rarely successful; the last reported successful application was some 12 years ago.
The urgent application was granted on the basis that the circumstances were exceptional. The company had been wound up at the first hearing without having the opportunity to make its arguments. The court had to be satisfied of the material changes in circumstances since the winding up hearing and that the creditors of the company would be repaid.
How Can a Winding Up Order be Rescinded?
Because in such a situation the company has normally already been placed into liquidation, the director and/or shareholder must apply to court to rescind a winding up order within a period of five business days from the making of the order. The directors ought ideally to be able to show that they can pay the outstanding debts, or they can give good reasons about why the winding up order ought to be cancelled or rescinded.
In order to dismiss the winding up petition so that the company can resume trading, the court will need to be satisfied that:
- The debt to the creditor making the petition has been paid or will be paid, which will dictate whether the rescission order is made and what happens to the winding up petition;
- The costs of the Official Receiver (or any other liquidator appointed) can be paid and the company is solvent, at least on the basis that it can pay its debts when they fall due;
- The application has not been presented in a misleading way and the court has been provided with all the material facts and has not been left in doubt;
- The trading operations of the company have been fair and above board and there is nothing that requires investigation by the Official Receiver or Liquidator.
Speaking after the conclusion of the case, Milan Kapadia at RWK Goodman’s London Office, said:
“We are pleased to have helped our client out of a difficult situation and the court’s decision to rescind is confirmation of the bright future that the company has.”
This was the right result for our client and confirms our firm’s expertise in insolvency situations. The client was pleased with the service from RWK Goodman and counsel, Rachel Earle.