UK: England and Wales: winding-up in the public interest

Section 124A of the Insolvency Act (1986) provides the Secretary of State for the Department of Business, Enterprise and Regulatory Reform with the power to petition the court for the winding-up of a company where this is “expedient in the public interest”. In considering the Secretary of State’s application, the court must satisfy itself that it is “just and equitable” for the company to be wound-up.

In a recent case - Re Tag World Services Ltd. and Club Labourse Travel Ltd. (Ch.D., Robert Englehart QC, 30 July 2008) - the Secretary of State petitioned for the winding-up of two companies both of which were subsidiaries of the same parent company.  The petition for one of these (Tag World) was granted (there was clear evidence of deceptive marketing practices).  It was argued for the Secretary of State that the second company (Club Labourse) should also be wound-up because it was inextricably linked with the first company and tarnished by its behaviour (although there was no evidence that it had acted wrongfully or disreputably).  The trial judge rejected this argument and observed (at para. [51]) that it would be wrong to wind-up the second company in the absence of any complaints against it. 

Notes: 

[1] The judgment is not yet available on BAILII but it has appeared on the Lawtel subscription service.  Update (24 September 2008): the judgment is now available on BAILII - click here. 

[2] For an earlier earlier post concerning Section 124A, click here.