Credit Lucky Ltd & Anor v National Crime Agency

The power to rescind a winding-up order is discretionary and must be exercised cautiously. The applicant must show exceptional circumstances involving a material difference from the circumstances before the court that made the order. A proposed alternative administration or later evidence will not suffice where the offer is uncertain, inadequately evidenced, or does not materially alter the position. A stay pending proceedings before another tribunal is available where appropriate, but the jurisdiction must be exercised judicially. A stay should be refused where the same objective can be achieved by a less drastic direction and continuation of the winding up would protect the creditors and investigation.

Credit Lucky Limited and its sole director, Gui Hui Dong, applied for rescission, variation or review of a winding-up order made by Registrar Derrett on 21 June 2013. Alternatively, they sought a stay under section 147 of the Insolvency Act 1986 pending a tax appeal. The winding-up petition concerned assessed unpaid corporation tax. The applicants relied on a conditional third-party offer said to support an administration and on evidence concerning approximately £504,000 held by the liquidator. The central issues were whether either matter constituted exceptional and materially different circumstances, and whether a stay was justified while the tax appeal remained unresolved.

1. The application to rescind the winding-up order was dismissed. Under rule 7.47(1) of the Insolvency Rules 1986, the jurisdiction was discretionary and had to be exercised with caution. The applicant bore the burden of showing exceptional circumstances involving a material difference from the circumstances before the original court. The principles stated in Metrocab Limited [2010] EWHC 1317 were adopted.

2. The conditional offer to invest in Credit Lucky and purchase its goodwill, name and database was not reliable enough to justify rescission. Its conditions were inadequately explained, the proposed purchaser’s financial capacity was not satisfactorily evidenced, and it was unclear that creditors would be placed in a better position. The offer therefore did not amount to exceptional circumstances materially different from those before Registrar Derrett.

3. The argument based on the £504,000 fund also failed. Before the winding-up order, both the company’s financial adviser and the petitioning creditor had maintained that the money belonged to clients rather than to Credit Lucky. The provisional liquidator could not realistically have paid the undisputed petition debt from that fund in the face of those competing claims. The liquidator’s later view that the money belonged to the company did not alter the position at the date of the winding-up order.

4. The stay application was refused. The court had jurisdiction under section 147 of the Insolvency Act 1986 and should exercise it judicially, without treating past practice as a fetter. However, continuation of the winding up would not cause irremediable loss because an interested party could apply for directions enabling the tax appeal to be pursued in the company’s name. A stay would be disproportionate and would hinder the liquidator’s investigation.

5. The application for permission to appeal was not finally determined in this judgment. The parties were invited to state whether it could be dealt with on the papers.

The judgment arose from applications relating to the winding-up order made by Registrar Derrett on 21 June 2013. The judgment does not give a citation for that order. The application for permission to appeal was left to be considered subsequently, potentially on the papers.