Monday 3 November 2008

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

In Re Abacrombie & Co Ltd. [2008] EWHC 2520 (Ch), David Richards J. granted an application for the winding-up of a company presented under Section 124A of the Insolvency Act (1986) by the Secretary of State for the Department for Business, Enterprise and Regulatory Reform.  Section 124A provides the Secretary of State with the power to petition for the winding-up of a company where this is "expedient in the public interest"; the court must be satisfied that it is "just and equitable" for the company to be wound-up. 

Section 124A cases are of interest because they provide an insight into Government and judicial perceptions regarding the acceptable purposes for which the corporate form can be used. In Abacrombie, the Secretary of State advanced several grounds why the company should be wound-up. David Richards J. accepted all of these but stated that winding-up would have been granted on a single ground: that the company's activities did not benefit its clients. Indeed, the company's activities were said to subvert the proper functioning of the law and procedures of bankruptcy.  

Note: For further cases concerning Section 124A, from earlier this year, see here and here

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