A Company (Injunction To Restrain Presentation of Petition)

When deciding whether to grant relief controlling or managing its own processes, the court may take account of a likely change in the law relevant to the decision. It may restrain presentation of a winding-up petition where the petition is unlikely to result in a winding-up order, but its presentation would seriously damage the company. The court may also consider the clear policy of impending legislation. On an interim injunction, a commercial applicant will ordinarily be required to give the usual cross-undertaking in damages. The requirement reflects fairness and does not depend on showing that loss is likely.

A High Street retailer applied urgently to restrain its landlord from presenting a winding-up petition based on unpaid rent and service charge. The petition had been e-filed but not presented because the court fee had not been paid. The application was considered on an effectively ex parte basis.

The company relied principally on schedule 10 to the Corporate Insolvency and Governance Bill 2020, which was expected to restrict winding-up petitions and require consideration of whether coronavirus had financially affected the company. The central issues were whether the court could anticipate that legislative change when controlling its processes and whether an interim injunction should be granted without a cross-undertaking in damages.

1. Interim injunction granted. The presentation of the winding-up petition was restrained until the hearing of the company’s application for a final injunction.
2. The court could take account of the likelihood of a change in the law when deciding whether to grant relief which controlled or managed its own processes. The authorities relied on for that proposition were Hill v C A Parsons [1972] Ch 305, Sparks v Holland [1997] 1 WLR 143 and Travelodge Ltd v Prime Aesthetics Ltd [2020] EWHC 1217 (Ch).
3. Schedule 10 to the Corporate Insolvency and Governance Bill 2020, if enacted substantially in its current form, would require the court to consider whether coronavirus had had a financial effect on the company and whether the relevant insolvency facts would have arisen without that effect. The evidence showed a strong case that coronavirus had financially affected the company and that the relevant facts would not otherwise have arisen.
4. The petition was therefore unlikely to result in a winding-up order, while its presentation would seriously damage the company. The court was not powerless to prevent its procedures being used in circumstances where the petition was unlikely to achieve a winding-up order but would cause serious damage. Restraining presentation was also strongly supported by the policy objectives of the Bill.
5. The company was required to provide the usual cross-undertaking in damages. Applying the reasoning in JSC Mezhdunarodniy Promyshlenniy Bank and another v Pugachev [2016] 1 WLR 160, the requirement rested on fairness rather than the likelihood of loss.

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