Secretary of State for Business Energy And Industrial Strategy v Celtic Consultancy & Enterprises Ltd & Ors

The Secretary of State presented three petitions under section 124A of the Insolvency Act 1986 seeking public‑interest winding up orders against Haoma (UK) Ltd, Celtic Consultancy & Enterprises Ltd (CCE) and Celtic PMC Ltd (PMC), supported by an investigation under section 447 of the Companies Act 1985. The judge analysed the established principles for public‑interest winding up (including the need for the court to decide whether it is just and equitable and to identify the public interest to be promoted) and considered whether lack of transparency in each company’s affairs justified winding up.

Applying those principles, the court found that CCE and PMC, controlled by Mr Clive Howells, had given a coherent account that the receipts were back‑end commissions designated to CCE by Mr Howells and that the payments to PMC were part of a remuneration trust arrangement; the judge accepted Mr Howells as a frank and honest witness and found no evidence of lack of probity or of a public interest sufficient to justify winding up those two companies. By contrast, Haoma (which did not defend the petition) failed to provide satisfactory explanations for substantial receipts and payments, showed an opaque relationship with Active Wealth and payments to Mr Reynolds and others, and had failed to file accounts and a confirmation statement. The court held that, on the facts, Haoma’s affairs had been conducted in an inherently objectionable way and that winding up on public‑interest grounds under section 124A was justified.

Background and parties. The Secretary of State for Business, Energy and Industrial Strategy presented three petitions under s.124A Insolvency Act 1986 to wind up Haoma (UK) Ltd, Celtic Consultancy & Enterprises Ltd (CCE) and Celtic PMC Ltd (PMC) on public‑interest grounds, based on an investigation carried out pursuant to s.447 Companies Act 1985. CCE and PMC were defended by their sole director and shareholder, Mr Clive Howells; Haoma did not file a defence.

Nature of the application. The Secretary of State sought winding‑up orders in the public interest. The petitions alleged lack of commercial probity and lack of transparency in payments by investment companies that flowed through SPA, Haoma and other intermediaries to CCE and then to PMC and others, and, in Haoma's case, additional allegations including failure to file statutory accounts and a confirmation statement.

Evidence and procedural posture. The petitions were supported by witness statements from Company Investigations (the Insolvency Service) including Ms Karen Clarke and Mr David Lennox Hope, and by documents from the FCA and third parties; Mr Howells gave evidence in opposition on behalf of CCE and PMC and was cross‑examined. The court assessed witnesses' credibility and the documentary record, including an FCA report concerning Celtic Wealth / Active Wealth and payment flows involving SPA, Haoma and Hiero.

Issues framed. The principal issues were (i) whether the companies’ affairs displayed a lack of commercial probity or inherent objectionability sufficient to identify a public interest that would be promoted by winding up under s.124A; (ii) whether inability or failure to explain the basis of receipts could, on these facts, establish such lack of probity; and (iii) for each company, whether the evidence justified a winding‑up order.

Court’s reasoning and findings.

• The court reviewed the legal test for s.124A petitions and related authorities (including PAG 1 and PAG 2), emphasising that the Secretary of State bears the burden to show that winding up is just and equitable and that the court must identify the public interest to be advanced by the order.
• The judge recognised that, although there is no free‑standing obligation to explain every transaction, in some cases an inability or refusal to provide cogent explanations may, on the facts, indicate conduct that is inherently objectionable (for example where unexplained receipts suggest proceeds of crime or money‑laundering); in such circumstances the public interest may justify winding up.
• As to CCE and PMC, the court accepted Mr Howells’ evidence that the funds were back‑end commissions paid by investment companies in respect of investments made by clients introduced by Celtic Wealth to Active Wealth, that CCE had been designated by Mr Howells to receive that separate revenue stream, and that PMC received funds as part of a remuneration trust arrangement. Mr Howells was found honest and cooperative, and there was no allegation of failure to keep adequate accounting records or of lack of cooperation with the s.447 investigation. The judge concluded there was no cogent evidence of impropriety, no identifiable public interest that winding up would promote, and dismissed those two petitions.
• As to Haoma, the court found significant and unexplained features: opaque control and apparent de facto involvement of Mr Reynolds despite Mrs Webb being the sole recorded director and shareholder; large payments from investment companies with inadequate documentary explanation of their basis or to which clients they related; substantial payments from Haoma to Mr Reynolds, Mr Deeney and others; and failure to file accounts and a confirmation statement. Haoma provided no defence. The combination of these matters justified the inference that Haoma’s affairs had been conducted in an inherently objectionable way and demonstrated a public interest in winding it up on that basis. The court made a winding‑up order against Haoma.

Outcome. The court wound up Haoma (UK) Ltd on public‑interest grounds under s.124A Insolvency Act 1986 and dismissed the petitions against CCE and PMC.

First instance: The court made a winding up order in respect of Haoma (UK) Ltd on public‑interest grounds under section 124A Insolvency Act 1986, the judge finding Haoma’s affairs to have been conducted in an inherently objectionable and opaque way and noting failure to file accounts and a confirmation statement. The court dismissed the petitions against Celtic Consultancy & Enterprises Ltd and Celtic PMC Ltd after accepting Mr Howells’s explanation that receipts were back‑end commissions, finding no lack of probity, adequate cooperation with the s.447 investigation and no identifiable public interest in winding up those companies.