CLOSE SEARCH
When a creditor attempted to use the threat of liquidation as a high-pressure debt collection tactic, we intervened to protect our client’s business. By identifying that the £160,000 debt was subject to a genuine contractual dispute, we successfully argued that the creditor’s actions constituted an "abuse of process". We secured a dismissal of the Winding-Up Petition and acted swiftly to prevent public advertisement, ensuring the client’s bank accounts remained active and their reputation stayed intact.
Crucially, avoiding public advertisement saved the company's ongoing financial restructuring plans, an initiative that would have faced fatal consequences had the petition been published.
The Alleged Debt: A creditor claimed £160,000 for unpaid utility and service charges at a commercial premises.
The Dispute: The client raised legitimate concerns regarding the accuracy of the utility supply charges and the validity of the service fees.
The High Stakes: Alongside defending this dispute, the client was actively seeking financial restructuring. Progression of this restructuring was vital for the company's future, making the threat of insolvency exceptionally dangerous.
The Statutory Demand: The creditor served a formal 21-day notice, the first step toward forced bankruptcy or liquidation.
The Escalation: Despite our formal dispute of the debt, the creditor ignored the response and filed a Winding-Up Petition to shut down the company.
The central legal issue was the creditor's misuse of the insolvency regime. In the UK, the law is clear: insolvency proceedings cannot be used to recover a debt that is subject to a "substantial and genuine dispute".
Our approach was to move the case out of the "insolvency" category and back into a "contractual dispute" category. We focused on proving that our client was not "unable to pay their debts," but rather "unwilling to pay an incorrect amount", a vital distinction that makes a Winding-Up Petition legally invalid. Given the client's concurrent financial restructuring, it was absolutely imperative to have this defective petition dismissed immediately before it could inflict irreversible corporate damage.
Speed - once a petition is served, the clock is ticking to prevent it from becoming public and freezing your company's bank accounts. For businesses undergoing sensitive corporate manoeuvres like financial restructuring, a public advertisement is an immediate, fatal blow.
Evidence Compilation - we didn't just claim there was a dispute we gathered technical evidence regarding the utility charges to show the court that the client’s refusal to pay was grounded in fact, not avoidance.
Proving Negligence - we documented that the creditor had been made aware of these issues months prior but chose to ignore them in favour of aggressive litigation.
Preventative Shielding - we prioritised blocking the advertisement of the petition in The Gazette. Since banks automatically freeze accounts upon seeing these notices, stopping the advertisement was critical to the business’s survival. Furthermore, preventing public advertisement was essential because any public notice would have been instantly fatal to the progression of the client's financial restructuring.
The Judge agreed with our assessment, ruling that the debt was genuinely disputed and the petition was an inappropriate use of the court's power. The Winding-Up Petition was dismissed.
Because we acted before the petition was advertised, our client’s credit rating and banking facilities remained unaffected. The business was able to resume normal operations immediately, shifting the fight back to a standard contractual negotiation on their own terms. Most importantly, getting the defective petition dismissed ensured that the client's financial restructuring could proceed smoothly without disruption.
Get in touch
If you would like to speak with a member of the team you can contact us on:
