Oncoqr ML GmbH v Frederick Jacobs & Ors

The petitioner sought a just and equitable winding up of TYG Oncology Limited under section 122(1)(g) of the Insolvency Act 1986, relying principally on functional deadlock and a breakdown of mutual trust and confidence in a company properly regarded as a quasi‑partnership. The Court applied the statutory and equitable framework, including section 125(2) Insolvency Act 1986 (alternative remedies) and the principles in Ebrahami, Re Yenidje and Chu v Lau.

The judge found that, at the date of the final hearing, the company was in functional deadlock and that mutual trust and confidence between the two camps of directors had irretrievably broken down; either ground alone would justify winding up. The Court rejected the respondents' clean‑hands arguments: the alleged payments (c.€1,000,000) to OncoQR/S‑TARget and the transfers in December 2022 were not shown to breach the directors' duties such that the petitioner should be denied relief, and where necessary any detailed investigation of transactions was left to a liquidator. The petition was granted and a liquidator to be appointed.

The petitioner, OncoQR ML GmbH (50% shareholder in TYG and controlled by CL and GM), presented a petition for a just and equitable winding up of TYG Oncology Limited. The petition alleged (i) that the board was functionally deadlocked because votes divided along factional lines and (ii) that TYG was a quasi‑partnership in which the personal relationships of trust and confidence between the co‑founders had collapsed.

Nature of the application: a petition for winding up on just and equitable grounds under section 122(1)(g) of the Insolvency Act 1986.

Key issues for determination:

• Whether the company was functionally deadlocked at the date of trial;
• Whether TYG should be treated as a quasi‑partnership and whether there had been an irretrievable loss of mutual trust and confidence;
• Whether the petitioner was barred from equitable relief by the doctrine of clean hands in light of alleged breaches of directors' duties (notably under the Companies Act 2006: s172, s175, s177) and alleged misappropriation; and
• Whether alternative, less draconian remedies were available under section 125(2) Insolvency Act 1986.

Court's reasoning (concise): The judge reviewed witness credibility and documentary material but focused on the legal tests. On deadlock the Court held that the assessment is forward‑looking at the date of trial and concluded that the deep and sustained factional split made future unanimous decision‑making unrealistic; the governance was functionally deadlocked. On quasi‑partnership, indicators (mutual trust, expectation of participation in management, unanimity provisions in the articles) supported treating TYG as such; the exchanges of allegations and threats evidenced an irretrievable breakdown of trust and confidence. On clean hands and alleged breaches of directors' duties, the Court found that the respondents had not proven, on the balance of probabilities, the asserted breaches in a manner that would establish the necessary close connection between the alleged misconduct and the winding‑up remedy; in particular the s177 disclosure exemption applied because the interested status of CL/GM in OncoQR/S‑TARget was known or should have been known to fellow directors. The Court also declined to make definitive factual findings on alleged criminality or misappropriation but left such matters to a liquidator to investigate if appropriate. On alternatives, the Court was not persuaded that realistic alternative remedies had been pursued or were practicable.

Result: the petition was allowed; the company is to be wound up and a liquidator appointed. The Court reserved a short further hearing to determine consequential matters including form of order and costs.

The petition for a just and equitable winding up is allowed. The court held that, at the date of the final hearing, TYG was in functional deadlock and, alternatively, that it was a quasi‑partnership in which mutual trust and confidence had irretrievably broken down. The judge exercised his discretion not to refuse relief on clean‑hands grounds because the respondents had not shown a sufficiently close connection between the alleged breaches of duty or payments complained of and the winding‑up remedy. The court concluded there were no realistic alternative remedies under section 125(2) Insolvency Act 1986 and ordered winding up with a liquidator to be appointed.