Preston & Anor v Green, Re Cre8atsea Ltd

An application to rescind a winding-up order requires standing, promptness and exceptional circumstances. A contributory or creditor may apply, but the applicant must establish that status with reliable evidence. The five-business-day limit in rule 7.47(4) is strictly enforced; an extension is exceptional and must be strictly justified, particularly where delay may prejudice creditors, office-holders or the administration of the winding-up. The CPR applies to an extension application within existing insolvency proceedings, including the three-stage approach in [2014] EWCA Civ 906. Rescission is not a forum to re-litigate the petition debt, investigate alleged misconduct or revive an insolvent business.

Mr Preston, a former director who claimed to be a creditor and contributory of Cre8atsea Ltd, applied to rescind the company’s winding-up order. The company had been wound up on 11 March 2013 following an initially HMRC-presented petition which was later pursued by Vodafone after substitution. At the final hearing the petition debt was undisputed and the company sought time to pay.

The rescission application was made on 20 May 2015, more than two years after Mr Preston knew of the order. The central issues were whether he had standing, whether time should be extended under rule 7.47(4), and whether the circumstances justified rescission despite the company’s insolvency and the admitted petition debt.

1. Standing. Mr Preston’s evidence did not reliably establish that the company owed him the claimed debt. The invoices were inconsistent with his witness evidence, insufficiently supported and produced or explained inadequately. He therefore was not shown to be a creditor and had no standing to apply.
2. Extension of time. The five-business-day period under rule 7.47(4) protects the certainty of a winding-up order and the interests of the creditor class. An extension must be exceptional and strictly justified. The delay of more than two years was serious and significant because the liquidator had been in office, costs had accrued and creditors’ interests could be affected. Ill health, ignorance as a litigant in person and correspondence with HMRC did not adequately explain the delay.
3. Applicable approach. Rule 7.51A(2) makes the CPR applicable with necessary modifications where consistent with the Insolvency Rules. CPR 3.9 applied to this application and required consideration of the seriousness and significance of the default, the reason for it and all the circumstances. The court applied that approach and refused an extension.
4. Substantive rescission. Rescission is appropriate only in exceptional circumstances, including a material difference from the circumstances before the court when the winding-up order was made. The court would not use the application to investigate the underlying VAT or Vodafone debts in detail, revisit HMRC’s conduct or treat a proposed resumption of trading as exceptional. The company remained insolvent, the petition debt had not been paid and the winding-up order had been regularly made.
5. The application to rescind the winding-up order failed. The order was made accordingly.

First-instance decision. No prior appellate decision is stated in the judgment.