Responding to a petition: application to restrain the advertisement of a petition
| Author | Mark Watson-Gandy |
| Pages | 65-78 |
OBJECTIVE
Given the serious financial and reputational consequences of the presentation and advertisement of a petition against a company,
The purpose of advertisement is twofold: (1) to give notice of the petition to those who are entitled to be heard on it, namely the creditors – whether actual, contingent or prospective – and contributories of the company; and (2) to give notice to those who might trade with the company during the period between the presentation of the petition and its final determination and who might thus be adversely affected by the provisions of section 127 of the Insolvency Act 1986.
Since rule 4.11(1) of the Insolvency (England and Wales) Rules 2016 requires advertisement unless the court otherwise directs, it is for the company to show sufficient reason for the judge to exercise his discretion and depart from the normal practice.
The application needs to be made promptly, given that the petitioner must advertise the petition, unless the court otherwise directs, not less than 7 business days after the date of service but not less than 7 business days before the day fixed for the hearing.
WARNING LETTER
Before an application is made for an injunction, a warning letter should be sent to the other side inviting them to give an undertaking not to advertise and proceed further on their winding up petition. This should be sent in an open letter:
ƒ setting out why the debt is disputed;
ƒ stating that winding up proceedings are inappropriate;
66 Corporate Insolvency Practice
ƒ requiring a solicitor’s undertaking not to proceed further and advertise the petition;
ƒ requiring a solicitor’s undertaking to take steps to withdraw the petition;
ƒ giving a costs warning;
ƒ stating that if the solicitor is not prepared to give the undertaking it will be the company’s intention to apply for an injunction in those terms;
ƒ requiring, if those circumstances apply, a solicitor’s undertaking not to proceed further and advertise the petition until that hearing takes place.
The need for the costs warning arises because a wasted costs order may be made against a solicitor who presents a petition knowing it is bona fide contested and fails to advise his client that the petition is an abuse of process.
APPLICATION
If the warning letter fails to produce a reply or the requisite undertaking, then the company applies on notice by application against the creditor to the judge to restrain advertisment of the winding up petition. The application needs to be made to the court in which the petition is pending.
The application can be made without notice if urgent. It needs to be made to the court which has jurisdiction to wind up the company.
ƒ that the application is made under rule 7.24 of the Insolvency (England and Wales) Rules 2016;
ƒ the name of the court in which the application is made;
ƒ the case number;
ƒ the names of the parties;
Rules 2016. Electronic documents are sufficiently authenticated if the recipient is satisfied with the identity of the sender: rule 1.5(1). Where the document is authenticated by an individual on behalf of a body corporate, it should state the capacity in which he signs and (if applicable) also state if he is the company’s sole member: rule 1.5(3).
ƒ the name of the company;
ƒ the company’s registered address;
ƒ if the company is incorporated in England and Wales:
– the company’s registered number;
ƒ if the company is incorporated outside the United Kingdom:
– the country in which it is incorporated;
– the company’s registered number in that country;
– its overseas registered company number under Part 34 of the Companies
Act 2006;
ƒ if the company is unincorporated in England and Wales: ƒ
– the company’s postal address;
ƒ the name of the office-holder;
ƒ the nature of the office-holder’s appointment, e.g. liquidator, administrator;
ƒ the nature of the remedy the court is being asked to grant
ƒ the names and addresses of the persons on whom the application will be served or on whom notice of the application will be given;
ƒ the address for service of the applicant.
COURT FEES
Where the application is made for determination by the court, a court fee of £155 is payable.
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