Alpha Schools (Holdings) Limited v Signal Alpha III Fund LP

Relief restraining presentation of a winding-up petition is appropriate where the alleged debt is bona fide disputed on substantial grounds or the company has a genuine and substantial cross-claim capable of extinguishing it. The process is summary, but the court must not conduct a mini-trial or allow evidential complexity to conceal the absence of an arguable case. Where material factual issues require disclosure, cross-examination or expert evidence, ordinary claim proceedings are appropriate. Contractual claims for costs are subject to an implied requirement of reasonableness. Abusive pressure on the debtor or third parties is an additional reason to restrain presentation of a petition.

The applicant, a private-school group, sought an injunction restraining the respondent lender from presenting a winding-up petition based on claimed transaction expenses and a break fee arising from an incomplete refinancing. The applicant advanced fraudulent and negligent misrepresentation claims, challenged the contractual basis and amount of the claimed fees, relied on its right to have solicitors’ bills assessed, and alleged abusive conduct in the service of statutory demands and correspondence with a competing lender. The respondent disputed the allegations and contended that the refinancing had failed because of the applicant’s conduct. The central issues were whether the debt was disputed on substantial grounds, whether there was a sufficient cross-claim, whether the fees were presently quantifiable, and whether the respondent’s conduct justified relief.

1. Relief granted. The court restrained the respondent from presenting a winding-up petition. The claimed debt could not properly be resolved summarily.
2. The governing principles from Angel Group v British Gas Trading Ltd, Coilcolor Limited v Camtrex Limited, Re a Company (No 6685 of 1996) and Re Bayoil SA were applied. Relief may be granted where the debt is bona fide disputed on substantial grounds or where there is a genuine and substantial cross-claim sufficient to extinguish the petition debt. Bare assertions and unsubstantiated cross-claims do not suffice.
3. The winding-up jurisdiction is summary. The court should not conduct a mini-trial or disbelieve written evidence unless it is plainly incredible or contradicted by relevant documents. It should hesitate before deciding issues where disclosure, cross-examination or expert evidence at trial may affect the outcome.
4. The representations concerning timing, due diligence and investment committee approval were capable of amounting to actionable representations when viewed objectively and in their commercial context. They could not be dismissed merely as sales talk. The allegations of fraudulent misrepresentation had sufficient substance, as did the alternative claim under section 2(1) of the Misrepresentation Act 1967.
5. The break-fee issue was arguable because the term sheet specified which provisions were legally binding. A contractual term requiring payment of legal or transaction expenses impliedly required the fees claimed to be reasonable. Sections 70 and 71 of the Solicitors Act 1974 gave the applicant a right to seek assessment of solicitors’ bills. Foreign lawyers’ fees also required proof of reasonableness and quantum.
6. Correspondence threatening pressure on a competing lender and statutory demands against group companies with no identifiable liability amounted to abusive conduct. That conduct supported the discretionary injunction.

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