Regal 38I83 Ltd (No 11449290) v DBCG UK Limited & Anor

A winding-up order should not ordinarily be made where the petition debt is bona fide disputed. The court’s discretion must account for the wider context and any genuine dispute about the legal character of payments, even where bank records describe them as loans. Where the dispute requires assessment of personal and financial arrangements between the parties, the winding-up jurisdiction is unsuitable for resolving it. The order should be set aside where material information was not before the court below, subject to the interests of justice and any procedural default by the appellant.

Regal 38I83 Ltd appealed against a winding-up order made on 3 August 2022 on the petition of DBCG UK Ltd. The petition relied on alleged loans totalling approximately £27,000 and referred to a County Court judgment. The appellant argued that the payments were maintenance made during her marriage to the second respondent, not commercial loans, and raised issues concerning service, adjournment and the wider family-law context.

The central issue was whether the alleged debt was sufficiently disputed to prevent the exercise of the winding-up discretion.

1. Appeal allowed. The winding-up order should not have been made and the petition was to be dismissed.
2. Under Insolvency Act 1986, s 125, the court exercises a discretion. Although not a rule of law, the established convention is that the discretion will not ordinarily be exercised where the petition debt is bona fide disputed: Botleigh Grange Hotels Ltd v Revenue and Customs Commissioners [2018] EWCA Civ 1033 at para [8].
3. There was sufficient uncertainty about the nature of the payments to establish a genuine dispute. The parties’ former marriage gave context to the appellant’s case that the payments were maintenance rather than loans. The bank statements’ description of the payments was relevant but not determinative. The absence of any clear agreement as to when repayment would occur reinforced the uncertainty.
4. The County Court judgment did not remove the dispute. The appellate court had little information about it and therefore treated it with care and circumspection. If the appellant lacked the underlying materials, they should be provided so that she could obtain advice and consider any further steps.
5. Although the appellant had not attended the winding-up hearing, she had raised the substance of her case in an earlier written statement. The points were therefore not new. The material wider context had not been drawn to the lower court’s attention, and the interests of justice justified appellate intervention.
6. The proper forum for resolving the classification of the payments was the ongoing financial-settlement proceedings, whether conducted in France or England. The appellant was awarded her court fees of £550 and £304 under Civil Procedure Rules 1998, r 46.5.

• Chancery Appeals (ChD): Appeal from a winding-up order made on 3 August 2022. The appeal was allowed, the winding-up order was held to have been wrongly made, and the petition was to be dismissed.