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Winding Up Order can be made even if debt is disputed

A recent High Court decision has confirmed that a winding up order can be made even if the debt supporting the petition is in dispute.

The defendant argued that the exact position between the parties was complex and there was uncertainty as to the precise sum due. The Court rejected this defence having considered whether or not any part of the debt was indisputable and, if so, did it exceed the statutory minimum of £750.

The Court found that it should not be concerned about determining what could be proved in a winding up only whether or not the petitioner is entitled to present a winding up petition and, having determined that a company is insolvent, whether it is proper that a winding up order is made.

This case highlights how important it is to seek early professional advice if presented with a winding up petition, even if you believe the debt is heavily disputed. If there is an indisputable element of the debt owed of more than £750 the Court, in absence of evidence to the contrary, can deem the company insolvent and make a winding up order. This commonly occurs where HMRC are the petitioning creditor and the defendant accepts part of HMRC’s claim but disputes the total.

 

 

Date: 8th November, 2012
Author: Steve Smith

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