Glocin Limited v Bancibo SE

A winding-up petition should not proceed where the alleged debt is genuinely disputed on substantial grounds. The Companies Court is not the appropriate forum for resolving substantial factual or foreign-law disputes, particularly because petition proceedings generally involve limited pleadings, disclosure and oral evidence. A dispute must have real substance; a mere cloud of objections is insufficient. Where contractual contributions require agreement, repeated payment of earlier invoices does not necessarily establish agreement to later invoices. The petition should be struck out where the petitioner cannot demonstrate a sufficiently clear debt and its standing as a creditor is consequently in issue.

Bancibo presented a winding-up petition against Glocin for unpaid invoices issued under contracts governed by Czech law. Glocin applied to strike out the petition as an abuse of process or to restrain advertisement, arguing that the invoices were disputed on substantial grounds and that the contractual sums had not been agreed.

Bancibo also applied to vary an interim restraint on advertisement so that it could notify a third party connected with Glocin’s chief executive officer’s insolvency proceedings. The court considered the contractual provisions, competing expert evidence on Czech law, the alleged agreement arising from payment of earlier invoices, and Glocin’s asserted cross-claim.

1. Strike-out application allowed. The petition debt was genuinely disputed on substantial grounds. The petition was therefore struck out.
2. The governing test, drawn from Re a Company [2013] EWHC 4291 (Ch) and Coilcolour Ltd v Camtrex Ltd [2015] EWHC 3202 (Ch), requires substance in the dispute and in the company’s refusal to pay. A mere assertion of a dispute or a contrived cloud of objections is insufficient.
3. Glocin had established a strongly arguable case that there was no tacit or express agreement to the sums claimed under clauses 3.2 and 3.4 of the Contracts. Earlier payment of invoices did not, on the evidence, establish agreement to future contributions calculated according to the subsidiaries’ changing needs.
4. There was also a strongly arguable case that Bancibo’s failure to provide information and supporting proof breached its obligations under section 1975 of the Czech Civil Code and that, under section 1912(1) of the Czech Civil Code, Glocin could withhold payment until the relevant counter-performance was provided or secured.
5. The competing expert evidence on Czech law concerned material issues going to liability. Foreign-law expert evidence was treated as evidence of fact, and the substantial disagreement itself reinforced that the matter was unsuitable for determination through winding-up petition proceedings.
6. There was no sufficient evidential basis for striking out on Glocin’s alleged cross-claim, although that issue was unnecessary to the decision. Glocin’s solvency was also immaterial once Bancibo’s standing to present the petition was in doubt.
7. Bancibo’s application to vary the restraint on advertisement was dismissed. It was unusual, unnecessary and, by the hearing, redundant.