Injunction Applications

  • What is a winding up petition?

The presentation of a winding up petition to the Court is the first stage of the winding up process. This means that the petitioner [the person presenting the petition] is attempting to have the company compulsorily put into liquidation by the Court.

There are many reasons as to why a company could be put into liquidation but the most common reason is that the company has become unable to pay debts owing to its creditors [a person or company that money is owing].

  • Why would I want to prevent the advertisement of a winding up petition?

The petitioner is able to advertise a notice that a company has been served with a winding up petition in the London Gazette 7 days after the winding up petition has been served.

As soon as it is advertised that your company has been served a petition, your bank will become aware of the petition in a short period of time and they will take steps to freeze the company’s bank accounts and no further transactions will be possible.

Once advertised the winding up petition may not be withdrawn and it must be heard by the Court.

A company or individual who has presented the winding up petition cannot advertise the fact in the first 7 days of giving you the winding up petition. This is the perfect time frame in order to seek an injunction against the advertisement. An injunction is an Order by the Court to prevent somebody from doing something.

If your company has received a winding up petition within the last 7 days contact us immediately.

  • How would I go about preventing the advertisement of a winding up petition?

A company’s immediate concern will be to prevent the petitioner from advertising the petition. The company can prevent this by immediately paying the debt and the petitioner’s costs in full.

If this is not an option the company may seek an injunction, a Court Order, which will restrain the advertisement of the petition in the London Gazette. The Court will also have the power to restrict the petitioner in any other form it deems necessary.

  • How can a company be successful in obtaining an injunction?

The Court will grant an injunction which is a Court Order. This Court Order will prevent the petitioner from advertising the petition where the petition amounts to an abuse of process or is otherwise going to fail.

Please note the examples below where a petition can be considered an abuse of process or is otherwise going to fail:

  • When the debt which is the subject of the petition is genuinely disputed by the company on substantial grounds;
  • Where the company has a genuine dispute;
  • Where the petition is bound to fail due to a matter of fact or law;
  • Where the petition is oppressive or unfair to the company;
  • Where the creditor who has brought the petition has a more appropriate remedy to obtaining their debt.
  • Where the petition has been brought for another purpose rather than for the purpose of the company being wound up.
  • What are the costs involved in applying for an injunction?

The costs of an application to restrain advertisement will be at the discretion of the Court. The general rule is that the unsuccessful party will be ordered to pay the costs of the successful party.

Time is of the essence with injunctions. The Corporate Recovery and Insolvency Team frequently act for Companies in presenting winding up petitions and also act to prevent the advertisement of the winding up petition.

The team has extensive experience in turning around injunction applications in a short timeframe. To discuss further, please contact Angus Ashman, Partner and Head.