Secretary of State for Business Energy and Industrial Strategy v Sentor Solutions Commercial Limited

On a public-interest winding-up petition, the court retains a discretion even where the Secretary of State considers winding up expedient. The court must decide whether winding up is just and equitable by balancing all relevant factors and identifying the public interest promoted by the order.

Illegality is not essential. A company may be wound up where its business is inherently objectionable, including conduct showing a lack of commercial probity or prejudice to the public. Failure to cooperate with an investigation, inadequate accounting records and lack of transparency may reinforce the conclusion. Winding up an active and solvent company remains a serious step requiring reasons of sufficient weight.

The Secretary of State presented petitions under section 124A of the Insolvency Act 1986 seeking the public-interest winding up of four companies connected with a property investment scheme. The companies did not oppose the petitions.

The petitions alleged unauthorised and fraudulent investment activity, recovery-room or advance-fee fraud, misleading applications for DWP Kickstart grants, trading while insolvent, failure to cooperate with an investigation, failure to maintain or provide adequate accounting records, and lack of transparency. The central issues were whether the alleged conduct was established and whether it was just and equitable to wind up each company.

1. Disposition. Each company was ordered to be wound up in the public interest under section 124A of the Insolvency Act 1986. The court was satisfied that winding up was just and equitable.
2. Applicable approach. The Secretary of State’s opinion that winding up was expedient in the public interest was a prerequisite to presenting the petitions, but did not determine the outcome. The court had to exercise its own discretion, establish the relevant facts to the civil standard, balance the factors for and against winding up, and identify the aspects of public interest promoted by the order.
3. Inherently objectionable conduct. It was unnecessary for the business to involve illegal acts. Conduct could justify winding up where it was inherently objectionable because it conflicted with a clearly identified public interest. Concepts such as lack of commercial probity and inherent objectionability had moral content, but that content had to be informed by legal policy and judicial guidance rather than the judge’s personal morality.
4. Findings. The companies and the related company collectively operated an investment fraud involving false representations about property investments, security trustees, FCA authorisation, government backing and compensation protection. The court also found recovery-room or advance-fee fraud, attempts to obtain Kickstart grants by misleading representations, trading while insolvent, failure to provide adequate accounting records, non-cooperation with the investigation and a lack of transparency.
5. The first ground, involving lack of commercial probity and objectionable business activities, independently justified winding up. The failures concerning investigation, records and transparency fortified that conclusion. No factor pointed against immediate winding up, and the companies’ affairs required investigation by an independent office-holder.

First-instance decision. The judgment records no appeal or earlier judicial decision in the proceedings.