Abcor Finance Securities Limited v Binomia Ltd

A winding-up petition should be dismissed where the petition debt is disputed on genuine and substantial grounds. The Companies Court should not determine contractual construction or notice issues requiring disclosure and oral evidence in winding-up proceedings. Bare assertions do not suffice; the company must meet a minimum evidential threshold.

The court may also decline to wind up a company where there is a genuine and serious cross-claim which the respondent has been unable to litigate and which equals or exceeds the petition debt. The draconian nature of winding-up relief requires caution where the debt or cross-claim is materially uncertain.

Abcor Finance Securities Limited presented a winding-up petition against Binomia Ltd for £305,811.91 said to be due under a parent company guarantee securing lending to Binomia’s subsidiary, Circular Tech Solutions Limited.

Binomia contended that the debt was not due and payable because the underlying loan agreement was internally inconsistent, the contractual default notice had not been given, and emails did not comply with the agreement’s notice provisions. It also relied on alleged unlawful seizure of stock and a potential cross-claim. The court was required to determine whether these matters raised genuine and substantial disputes unsuitable for resolution in winding-up proceedings.

1. The Petition was dismissed. The court was satisfied that the petition debt was disputed on genuine and substantial grounds.
2. The repayment provisions in clause 4.1 of the Loan Agreement were internally inconsistent and did not make complete sense as drafted. Determining their proper interpretation would require consideration of admissible circumstances, disclosure and likely oral evidence. That issue was unsuitable for determination in insolvency proceedings.
3. There was also a genuine and substantial dispute as to whether the required notice under clause 11.2 of the Loan Agreement had been given. The emails relied upon did not, on their face, set out the specific matters required by that clause.
4. Even if notice under clause 11.2 had been given, there was a further genuine and substantial dispute as to whether the emails complied with clause 15. The emails might not have been signed within clause 15.1, and clause 15.2 did not specify email as a permitted delivery method.
5. The court applied the established principle, stated in Angel Group Ltd v British Gas Trading Ltd [2012] EWHC 2702 (Ch), that the Companies Court should not permit a winding-up petition to be used to determine a substantial dispute raised on bona fide grounds. The court also applied the caution required by the draconian nature of the remedy, as explained in Re Swan Campden Hill Limited [2021] EWHC 2470 (Ch) and Re Bayoil SA [1999] 1 All ER 374.
6. Obiter, the court considered that the alleged self-help seizure of stock also raised a plainly arguable issue. The premises were those of a third party, the debt’s due date was disputed, and some seized stock might not have belonged to the subsidiary. It would therefore have been inappropriate to make a winding-up order while those matters remained unresolved. No determination was made on the substance of the alleged claim, which would require separate Part 7 proceedings.
7. The parties were invited to agree a draft order, including costs, within seven days. Outstanding matters were to be determined at a further remote hearing if agreement was not reached.

Not stated in the judgment.