The Charit-Email Technology Partnership Llp v Vermillion International Investments Ltd.

A person seeking to appear and oppose a winding-up petition as a contributory must at least claim to belong to that class. A person who consistently denies being a member of a limited liability partnership cannot rely on the statutory expression “alleged to be a contributory” to obtain standing before the winding-up order. The statutory provision concerns the identification of contributories in and after the winding-up process, particularly the liquidator’s list. It does not determine contributory status for the purpose of hearing the petition itself. The established company-winding-up practice concerning tangible interest may require modification for LLPs, but that question should be left to a case involving an avowed LLP member.

Vermillion presented a petition to wind up Charit-Email Technology Partnership LLP for insolvency and failure to comply with a statutory demand for £28 million. Ninety-four individuals, who were recorded as members and whose investments potentially exposed them to contribution liabilities, sought to appear and oppose the petition.

They nevertheless maintained that they were not, and had never been, members or contributories. The Chief Registrar held that they lacked standing, applying the established practice that a contributory ordinarily must show a contingent surplus available for distribution. The appeal concerned whether persons denying membership could appear under the modified definition of “contributory” in section 79 of the Insolvency Act 1986.

1. Appeal dismissed. The appellants could not appear at the hearing of the winding-up petition as opposing contributories because they consistently denied that they were members of the LLP.
2. The court accepted that an LLP member’s different liabilities and closer interest in the partnership’s affairs may justify changes to the company-winding-up practice. In a company limited by shares whose shares are fully paid, the established practice generally requires a contributory to show a tangible interest, meaning a possible surplus for distribution. Exceptions have existed where a creditor or public-interest petition is involved.
3. That issue did not need to be decided for an avowed LLP member. A person seeking to exercise a right to appear in winding-up proceedings must at least claim to belong to the class on which the right is conferred. Otherwise proceedings may be delayed and made more costly by interventions from persons claiming to be neither creditors nor contributories.
4. The modified section 79 definition includes every present or past LLP member liable to contribute and, for proceedings determining contributories, any person alleged to be a contributory. That provision operates in the event of and following the winding-up. The relevant limit before final determination is the making of the winding-up order, after which the liquidator must prepare the list of contributories. It does not confer standing on a person who expressly denies being a contributory to oppose the petition.
5. The court left open the extent to which the established practice for companies limited by shares should be modified where an admitted LLP member seeks to appear.

High Court (Chancery Division): Appeal from the Chief Registrar’s order of 22 October 2008, dismissing the appellants’ claim to appear and oppose the winding-up petition. The appeal was dismissed.