Customs & Excise v Computer Servicing (South East) Ltd

Where evidence indicates that proposed investment may make a company substantially solvent and enable it to pay its creditors, the court may stay the winding-up proceedings to permit an application for rescission of the winding-up order. The court may also adjourn an outstanding application for permission to appeal, subject to an undertaking that the rescission application will be lodged promptly.

The High Court, sitting in Leeds, made a winding-up order against the respondent company on 7 September 2001. The company sought permission to appeal. At an earlier hearing on 19 September, the Court of Appeal stayed the winding-up proceedings to allow an application for rescission based on a proposed £200,000 share investment. At this further hearing, evidence showed that the funds were substantially available and being transferred. The central issue was whether the stay should continue and the permission application be deferred to allow the High Court to consider rescission.

1. The Court of Appeal accepted evidence that the proposed £200,000 investment would, on the figures available, leave the company substantially solvent and able to pay all its creditors, including Customs and Excise.
2. Because an application for rescission of the winding-up order had not yet been lodged only because the transfer of funds had taken longer than expected, the court allowed time for that application to be made.
3. Mr Polya, a director of the company, undertook to lodge the application notice seeking rescission, together with the requisite fee, at the Leeds District Registry by 4.00 pm on 17 October 2001. The court indicated that the application should be heard at an early date if possible.
4. Upon that undertaking, the winding-up order was stayed until the hearing of the rescission application or further order. The application for permission to appeal was adjourned to Chadwick LJ on 30 October 2001, in the expectation that the winding-up order would by then have been rescinded.

• High Court of Justice, Chancery Division: His Honour Judge McGonigal made a winding-up order against the company on 7 September 2001.
• Court of Appeal (Civil Division): At the present further hearing, the winding-up order was stayed on an undertaking and the application for permission to appeal was adjourned to 30 October 2001.