Thursday 6 August 2020

UK: England and Wales: winding-up companies on public interest grounds

The Court of Appeal gave judgment several days ago in Secretary of State for Business, Energy And Industrial Strategy v PAG Asset Preservation Ltd [2020] EWCA Civ 1017. A summary of this important decision, which concerned section 124A of the Insolvency Act 1986, has now been published by the ICLR: see [2020] WLR(D) 451.

Section 124A provides that where it appears to the Secretary of State that it would be expedient in the public interest that a company should be wound-up, the court may permit a winding-up petition to be presented where it concludes that it would be just and equitable to do so.  At first instance the trial judge declined, on the Secretary of State's application, to wind-up two companies that operated what was described as a business rates avoidance (or mitigation) scheme: see Secretary of State for Business, Energy and Industrial Strategy v PAG Asset Preservation Ltd [2019] EWHC 2890 (Ch)). The Court of Appeal affirmed that decision and noted (at para. [61]): 
.... when determining whether it is just and equitable to wind up a company under section 124A, the court is required to identify for itself the aspects of the public interest which would be promoted by making a winding up order. In this case, however, there is no challenge to the judge's finding that there was no evidence of harm to the public and in oral submissions before us, Mr Chaisty was unable to identify any class of the public who were or might be harmed. An essential element, therefore, is missing".

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