Insolvency Act 1986, section 122

Circumstances in which company may be wound up by the court

Part IV Winding Up of Companies Registered under the Companies Acts

(1)A company may be wound up by the court if—

(a)the company has by special resolution resolved that the company be wound up by the court,

(b)being a public company which was registered as such on its original incorporation, the company has not been issued with [F278a trading certificate under section 761 of the Companies Act 2006 (requirement as to minimum share capital)F278] and more than a year has expired since it was so registered,

(c)it is an old public company, within the meaning of the [F279Schedule 3 to the Companies Act 2006 (Consequential Amendments, Transitional Provisions and Savings) Order 2009F279] ,

(d)the company does not commence its business within a year from its incorporation or suspends its business for a whole year;

F280(e). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(f)the company is unable to pay its debts,

F281(fa). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(g)the court is of the opinion that it is just and equitable that the company should be wound up.

(2)In Scotland, a company which the Court of Session has jurisdiction to wind up may be wound up by the Court if there is subsisting a floating charge over property comprised in the company’s property and undertaking, and the court is satisfied that the security of the creditor entitled to the benefit of the floating charge is in jeopardy.

For this purpose a creditor’s security is deemed to be in jeopardy if the Court is satisfied that events have occurred or are about to occur which render it unreasonable in the creditor’s interests that the company should retain power to dispose of the property which is subject to the floating charge.

Definitions used in section 122 1

the company

2 Section 233B does not apply in relation to a contract for the supply of goods or services to a company (“the company”) where any of paragraphs 3 to 11 applies.

Defined in Sch.4ZZA para.2 · see it in the full Act

Cases considering section 122 88

Annette Doran & Anor v County Rentals Limited t/a Hunters

[2022] EWCA Civ 1376 · 24 October 2022

The court considered the power to wind up a company on the ground that it was unable to pay its debts, including whether it was likely that such an order could be made at the preliminary hearing. (see paras [13]; [25]-[26]; [40]-[50])

Loveridge v Loveridge

[2021] EWCA Civ 1697 · 19 November 2021

The court applied the just and equitable winding-up jurisdiction separately to each company. Neither deadlock, breakdown of confidence nor the other pleaded circumstances made winding up any of the five companies realistically arguable. (see paras [139]-[146])

Loveridge & Ors v Loveridge

[2020] EWCA Civ 1104 · 24 August 2020Limits

A breakdown in relations between majority and minority shareholders was insufficient to establish an arguable just and equitable winding-up case without a relevant deadlock or other pleaded basis (see paras [63]–[64]).

68 more judgments, and what each says about section 122, are in the case-law panel in the full Act.

Amendments and notes

13 notes from legislation.gov.uk

Amendments

  1. F278Words in s. 122(1)(b) substituted (6.4.2008) by The Companies Act 2006 (Consequential Amendments etc) Order 2008 (S.I. 2008/948), art. 3(1), Sch. 1 para. 102 (with arts. 6, 11, 12)
  2. F279Words in s. 122(1)(c) substituted (1.10.2009) by The Companies Act 2006 (Consequential Amendments, Transitional Provisions and Savings) Order 2009, (S.I. 2009/1941) arts. 2(1), 8, {Sch. 1 para. 75(12)} (with art. 10, Sch. 1 para. 84)
  3. F280S. 122(1)(e) omitted (12.5.2011) by virtue of The Companies Act 2006 (Consequential Amendments and Transitional Provisions) Order 2011 (S.I. 2011/1265), arts. 1(2), 6(4)
  4. F281S. 122(1)(fa) omitted (26.6.2020) by virtue of Corporate Insolvency and Governance Act 2020 (c. 12), s. 49(1), Sch. 3 para. 10 (with ss. 2(2), 5(2))

Modifications

  1. C317S. 122 applied (with modifications) by S.I. 1994/2421, art. 8, Sch. 4 Pt. II para. 6(a)
  2. C318S. 122 modified by 1986 c. 53, Sch. 15 para. 16(2) (as substituted (28.6.2016) by The Building Societies (Floating Charges and Other Provisions) Order 2016 (S.I. 2016/679), art. 1(1)(4), 2)
  3. C319S. 122 excluded by 1986 c. 53, Sch. 15 para. 16(1) (as substituted (28.6.2016) by The Building Societies (Floating Charges and Other Provisions) Order 2016 (S.I. 2016/679), art. 1(1)(4), 2)
  4. C320S. 122(1) modified (10.8.2005) by The Insurers (Reorganisation and Winding Up) (Lloyd's) Regulations 2005 (S.I. 2005/1998), regs. 2(3), 25(3)
  5. C321S. 122(1)(b) excluded (27.7.1999) by 1999 c. 20, ss. 2(5), 5(1), Sch. 2 Pt. II para. 9(b) (with s. 15)
  6. C322S. 122(1)(f) modified by S.I. 1989/1058, reg. 18(2)
  7. C323S. 122(1)(f) modified (6.4.2010) by The Community Infrastructure Levy Regulations 2010 (S.I. 2010/948), reg. 105(2)
  8. C324S. 122(1)(f) restricted (retrospective to 27.4.2020) by Corporate Insolvency and Governance Act 2020 (c. 12), Sch. 10 para. 5(1)-(3)(4) (with ss. 2(2), 5(2))
  9. C325S. 122(2) applied (with modifications) (1.8.2014) by Co-operative and Community Benefit Societies Act 2014 (c. 14), s. 62(1)-(4), 154 (with s. 62(7), Sch. 5)