Elevate Estates Management Ltd v Fine Star Ltd

A company seeking to restrain advertisement of a winding-up petition must show a genuine and substantial dispute about the petition debt or a genuine and substantial cross-claim. Mere assertion, an imprecise schedule or a cloud of objections is insufficient: credible and sufficiently precise evidence is required. The Companies Court may assess whether there is substance without conducting a mini-trial. Where part of the debt above the statutory minimum is indisputable, the petition may proceed despite a disputed balance. A validation order under Insolvency Act 1986, section 127 is exceptional for an insolvent company and requires evidence that the disposition serves creditors as a whole and does not risk unjustified dissipation or preference. Indemnity costs require conduct unreasonable to a high degree and outside the norm.

Elevate sought a validation order under section 127 of the Insolvency Act 1986 and an order restraining advertisement of Fine Star’s winding-up petition, presented on 23 June 2026. Fine Star relied on rent arrears of £836,557.23 at presentation, increasing to £1,120,586.87, while Elevate alleged uncredited payments and a £334,376.23 repair cross-claim. The central issues were whether Elevate had shown a genuine and substantial dispute or cross-claim, and whether a validation order would protect creditors. The court also considered permission to rely on evidence from earlier insolvency proceedings and the appropriate basis for costs.

1. Disposition. The application to restrain advertisement of the petition was dismissed. The validation order made on 8 July 2026 was discharged. Fine Star was permitted to rely on evidence from the earlier Vatry proceedings, the petition could be advertised on the first open date after seven days, and costs were ordered on the indemnity basis.
2. Threshold for restraint. Applying Angel Group Ltd v British Gas Trading Ltd [2012] EWHC 2702 (Ch) and Coilcolor Ltd v Camtrex Ltd [2015] EWHC 3202 (Ch), the court held that restraint requires a genuine and substantial dispute as to the petition debt or a genuine and substantial cross-claim. Mere assertion is insufficient. The court may determine whether substantial grounds exist, but must not conduct a mini-trial. The court explained that the lower-threshold observations in Tallington Lakes v South Kesteven District Council [2012] EWCA Civ 443 did not justify treating a shadowy defence as sufficient in an advertisement application.
3. Evidence and cross-claim. Elevate produced no particularised evidence identifying omitted payments, and its refurbishment invoices were unsupported by contemporaneous documentation. The lease provisions required rent to be paid without set-off and placed most repair obligations on Elevate. In any event, the alleged cross-claim did not equal the verified petition debt. The interference allegation did not bear on the issues.
4. Validation and insolvency. A validation order under section 127 is exceptional where the company is insolvent. Repossession, cessation of rent payments, arrears exceeding £1.1 million and the absence of a coherent repayment plan pointed strongly to inability to pay debts. The unexplained discrepancy between projected and actual balances and unclear payments to connected parties created a real risk of dissipation, so the court could not be satisfied that validation protected creditors as a whole.
5. Costs. The absence of serious evidence, failure to respond to Fine Star’s schedule and failure to engage with the lease terms made the application beyond the norm. Indemnity costs were therefore justified.

not stated in the judgment.