TCPC Management Limited v Windrush Alliance UK Community Interest Company

A winding-up petition should be struck out where the petition debt is disputed in good faith on substantial grounds. A company must identify a positive dispute with a rational prospect of success; speculative investigation is insufficient. A contractual settlement which finally compromises earlier liabilities may be enforced without further particulars unless the settlement itself is substantially challenged. Breach of a company’s constitution does not, by itself, invalidate a company act under Companies Act 2006, section 39. Regulatory concerns do not invalidate contractual obligations without a legal mechanism producing that consequence. Insolvency proceedings founded on an undisputed debt constitute an abuse only in limited circumstances, and that jurisdiction is exercised sparingly.

The petitioner presented a winding-up petition for £928,113.01 said to be due under a settlement agreement. The respondent applied to strike out the petition, contending that the debt was disputed on substantial grounds and that presentation of the petition was an abuse of process.

The respondent alleged that the underlying service arrangements were fraudulent or unlawful, that the settlement agreement was not binding, and that the debt had not been sufficiently particularised. It also alleged that the petition was being used to pressure the company in a dispute concerning a former director. The court determined whether those objections disclosed a bona fide substantial dispute or abuse sufficient to prevent the petition proceeding.

1. Application dismissed. The objections did not establish a bona fide dispute on substantial grounds or abuse of process. The petition was permitted to continue.
2. The applicable test, summarised in Angel Group Ltd v British Gas Trading Ltd [2013] BCC 265, is whether the company advances in good faith a substantial dispute as to the whole debt, or enough of it to reduce the undisputed amount below the applicable threshold. A dispute is not substantial if it has no rational prospect of success. The court may examine evidence in detail, but a company must assert a positive and substantial case rather than merely investigate in the hope that something will emerge.
3. The alleged unlawful profit-sharing arrangement lacked a substantial evidential foundation. The use of profit-sharing language did not establish fraud, illegality, improper extraction of profits, or a conspiracy to evade regulatory restrictions. Any breach of the articles would fall within section 39 of the Companies Act 2006 and would not itself invalidate the agreements. Concerns under the regulatory standard did not affect the parties’ contractual obligations because no invalidating provision was identified.
4. The challenge to the settlement agreement’s binding effect was based on a misunderstanding of an earlier injunction order and the context of an email. The contemporaneous documents showed that the agreement had been negotiated and signed. No substantial dispute arose on that issue.
5. The settlement agreement was a comprehensive, freestanding compromise of the parties’ prior dispute. It imposed no further obligation on the petitioner to provide the historical information sought by the company. The failure to provide those particulars therefore did not create a substantial dispute about the petition debt.
6. Abuse of process was not established. The jurisdiction applies sparingly where a petitioner does not genuinely seek insolvency relief or seeks to advance an objective contrary to the interests of creditors generally. Any tactical concern connected with the former director had passed, and liquidation would not prevent investigation of the company’s affairs.

The parties were invited to agree the form of order.