SKS Justa & Co Ltd & Anor v Justa Limited

The court will restrain presentation of a winding-up petition where the petition debt is disputed in good faith on substantial grounds. A dispute is not substantial if it has no rational prospect of success. The Companies Court should not determine a substantial dispute through the pressure created by a winding-up petition, but it may examine the evidence in detail to identify objections that are merely tactical or implausible.

Where a contract prescribes a process for calculating and agreeing deferred consideration, the parties must follow that process. The court will not add an unstated requirement for board approval. Once the contractual process has produced an agreed or deemed-agreed statement, later commercial concerns do not ordinarily create a genuine dispute. A cross-claim does not justify restraint where the undisputed net debt remains above the insolvency threshold.

Justa Limited served statutory demands on SKS Justa & Co Ltd and SKS Business Services Ltd for £393,202.71, comprising deferred consideration and interest under an asset purchase agreement. The applicants sought to restrain presentation of winding-up petitions, asserting that the debt had not become due because the required turnover statement lacked formal board approval, and raising later concerns about costs, debt collection and client losses.

The applicants also advanced an alleged cross-claim for approximately £200,000 in respect of advance receipts. By consent order, Justa undertook not to present a petition pending determination of the application. The central issues were whether the contractual turnover-statement process had been completed and whether the applicants had shown a bona fide dispute on substantial grounds.

1. Application dismissed. The applicants did not establish a genuine and substantial dispute. Their objections had no rational prospect of success.
2. The governing principles were those summarised in Angel Group Ltd v British Gas Trading Ltd [2012] EWHC 2702 (Ch). The court may examine affidavit evidence in detail, including where necessary to determine whether an alleged dispute is inherently implausible or merely creates a cloud of objections.
3. The asset purchase agreement required the applicants to procure and deliver a turnover statement within the specified period. It contained no requirement for prior board or shareholder approval. The detailed statement prepared and delivered by the applicants was a turnover statement within the contractual mechanism. The seller’s agreement, or deemed agreement following expiry of the review period, therefore caused the deferred consideration to become due.
4. The applicants’ contention that the document was only a draft was inherently implausible. The contractual timetable, the email exchanges and subsequent messages acknowledging that payment would be made all pointed to agreement. Later concerns about headcount costs, uncollected debts and client churn identified no contractual basis for reopening the agreed calculation.
5. The alleged cross-claim, even if valid, would leave the net amount owing substantially above the insolvency limit. It therefore provided no basis for restraining presentation of a winding-up petition, consistently with the principle noted in Sandstone Legal Limited v Curzon Claims Limited t/a Clockwork Claims [2025] EWHC 363 (Ch).
6. The court also accepted that inherently implausible or unsupported witness evidence may be rejected, applying Collier v P & MJ Wight (Holdings) Limited [2007] EWCA 1329. Arguments concerning Companies Act 2006 section 40, the rule in Turquand’s case and ratification did not require determination because they depended on the rejected premise that prior board approval was necessary.

The parties were invited to agree an order dealing with dismissal, the respondent’s undertaking, costs and any consequential directions.