A petition under section 122 of the Insolvency Act 1986

Discussion in 'Legal' started by Jonny2000, Jul 19, 2020.

  1. Jonny2000

    Jonny2000 UKBF Newcomer Free Member

    24 0
    Am I correct in thinking with this action the judge only has two options either a winding-up order is made, or it is not .
     
    Posted: Jul 19, 2020 By: Jonny2000 Member since: Feb 3, 2020
    #1
  2. Scalloway

    Scalloway UKBF Legend Free Member

    16,240 3,436
    According to this article.

    https://www.franciswilksandjones.co...g-up-petition-just-and-equitable-grounds.html

    "All parties considering such an action should be aware that the Courts will prefer to make an order in terms that one party purchase the other party’s shares for a specific amount (often the subject of expert evidence), rather than the more draconian order for winding-up of the company on just and equitable grounds."
     
    Posted: Jul 19, 2020 By: Scalloway Member since: Jun 6, 2010
    #2
  3. Jonny2000

    Jonny2000 UKBF Newcomer Free Member

    24 0
    This article says it differently ....

    • A section 459 petition, on the basis that the company's affairs are being conducted in an unfairly prejudicial manner; and/or
    • A petition under section 122 of the Insolvency Act 1986 (section 122 petition), on the basis that it is just and equitable that the company in question, even though solvent, should be compulsorily wound up.
    The two are usually combined because the section 122 petition gives the court no room for manoeuvre: either a winding-up order is made, or it is not. The section 459 petition is more flexible: the court can make such an order as it thinks fit.

    uk.practicallaw.
     
    Posted: Jul 19, 2020 By: Jonny2000 Member since: Feb 3, 2020
    #3
  4. Lisa Thomas

    Lisa Thomas UKBF Enthusiast Free Member

    3,545 455
    A Judge can make any order it seems fit to. I would think the Judge could grant an order that the hearing be adjourned in certain circumstances.
     
    Posted: Jul 20, 2020 By: Lisa Thomas Member since: Apr 20, 2015
    #4
  5. The Resolver

    The Resolver UKBF Big Shot Full Member

    3,181 1,072
    The judge can also , and they increasingly now do (albeit in more standard commercial cases) , encourage the parties to try and resolve through mediation before he is asked to make a decision.
     
    Posted: Jul 20, 2020 By: The Resolver Member since: Mar 31, 2006
    #5
  6. Michael Loveridge

    Michael Loveridge UKBF Contributor Free Member

    84 39
    A judge can't just make whatever order seems appropriate - he's limited by (a) what the law allows him to decide; and (b) what issues the parties have asked him to decide.

    A section 122 petition is just that - a request to the court to wind up the company. Consequently, that's all the judge can decide - whether or not to grant the request. He may well consider that it would be better for one party to buy the other's shares, but he can't make an order to that effect as that's not what he's been asked to do. That's the reason for simultaneously lodging a section 994 petition, which does allow a judge to make a purchase order.

    Likewise, by the time a winding up petition gets before a judge it's too late for mediation. In winding up proceedings there's no pre-trial discussion where mediation might be ordered - either he makes the order or refuses it.
     
    Posted: Jul 24, 2020 By: Michael Loveridge Member since: Aug 2, 2013
    #6
  7. Lisa Thomas

    Lisa Thomas UKBF Enthusiast Free Member

    3,545 455
    I was always taught that a Judge can make 'any order s/he sees fit'.
     
    Posted: Jul 24, 2020 By: Lisa Thomas Member since: Apr 20, 2015
    #7
  8. The Resolver

    The Resolver UKBF Big Shot Full Member

    3,181 1,072
    Michael - prior to a winding up order being issued by the court, its never too late to mediate .This is in contrast to a standard winding up for insolvency. Under s`122 the decision to be taken by a judge is discretionary as to whether, notwithstanding the company may not be insolvent, that it is 'just and equitable' that it be wound up. The evidence that is often offered usually relates to the dysfunctional relationship between the shareholders, leading to a stalemate in decision making causing damage to the company. If there is a prospect that the shareholders can come to an agreement that unlocks the stalemate then a judge ,if he sees fit, can, and should, encourage an attempt at mediation.
     
    Posted: Jul 27, 2020 By: The Resolver Member since: Mar 31, 2006
    #8
  9. Mike wells

    Mike wells UKBF Contributor Free Member

    42 0
    Just out of interest how bad would someone have to be for a judge to grant the winding up petition ? Something along the lines of embezzlement of company funds ?
     
    Posted: Aug 2, 2020 at 4:19 PM By: Mike wells Member since: Mar 31, 2019
    #9
  10. Lisa Thomas

    Lisa Thomas UKBF Enthusiast Free Member

    3,545 455
    The Judge just needs to be satisfied that there is a valid overdue debt of £750 to grant the order.
     
    Posted: Aug 3, 2020 at 2:26 PM By: Lisa Thomas Member since: Apr 20, 2015
    #10