Insolvency Act 1986, section 126

Power to stay or restrain proceedings against company

Part IV Winding Up of Companies Registered under the Companies Acts

(1)At any time after the presentation of a winding-up petition, and before a winding-up order has been made, the company, or any creditor or contributory, may—

(a)where any action or proceeding against the company is pending in the High Court or Court of Appeal in England and Wales or Northern Ireland, apply to the court in which the action or proceeding is pending for a stay of proceedings therein, and

(b)where any other action or proceeding is pending against the company, apply to the court having jurisdiction to wind up the company to restrain further proceedings in the action or proceeding;

and the court to which the application is so made may (as the case may be) stay, sist or restrain the proceedings accordingly on such terms as it thinks fit.

(2)In the case of [F298a company registered but not formed under the Companies Act 2006F298] , where the application to stay, sist or restrain is by a creditor, this section extends to actions and proceedings against any contributory of the company.

[F299 (3)Subsection (1) applies in relation to any action being taken in respect of the company under Part 1 of Schedule 8 to the Finance (No. 2) Act 2015 (enforcement by deduction from accounts) as it applies in relation to any action or proceeding mentioned in paragraph (b) of that subsection.F299]

Definitions used in section 126 2

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
contributory

(1) In this Act . . . the expression “contributory” means every person liable to contribute to the assets of a company in the event of its being wound up, and for the purposes of all proceedings for determining, and all proceedings prior to the final determination of, the persons who are to be deemed contributories, includes any person alleged to be a contributory.

Defined in s.79(1) · see it in the full Act

Cases considering section 126 6

A Company (Number CR-2024-BHM-000012), Re

[2024] EWCA Civ 1436 · 25 November 2024

Applied to explain that the court may stay actions or proceedings against a company at any time after presentation of a winding-up petition. (see para [22])

Cooper v Natural Resource Body for Wales

[2019] EWHC 2904 (Ch) · 30 October 2019Interprets

Interprets the distinction between applying to the court where proceedings are pending for a stay and applying to the court having jurisdiction to wind up the company to restrain other proceedings. The court held that this provision did not confer power to impose a stay in proceedings before another court (see paras [19]-[24]).

Pillar Denton Ltd & Ors v Jervis & Ors

[2014] EWCA Civ 180 · 24 February 2014

Permits the court, between presentation of a winding-up petition and the order, to stay an action or proceeding against the company on appropriate terms. Its possible application to distress or peaceable re-entry was noted as uncertain. (see para [31])

What each judgment says about section 126 is in the case-law panel in the full Act.

Amendments and notes

6 notes from legislation.gov.uk

Amendments

  1. F298Words in s. 126(2) 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(14)} (with art. 10, Sch. 1 para. 84)
  2. F299S. 126(3) inserted (18.11.2015) by Finance (No. 2) Act 2015 (c. 33), Sch. 8 para. 27

Modifications

  1. C343S. 126 excluded (25.4.1991) by Companies Act 1989 (c. 40), ss. 154, 155, 161(4); S.I. 1991/878, art. 2, Sch..
  2. C344S. 126 applied (with modifications) (6.6.2013) by The Collective Investment in Transferable Securities (Contractual Scheme) Regulations 2013 (S.I. 2013/1388), Pt. 3 reg. 1, Sch. 2 paras. 3, 5 Table (with reg. 24)
  3. C345Ss. 126-128 applied (with modifications) (4.1.2024) by S.I. 2021/716, Sch. 1 para. 3 (as amended by The Payment and Electronic Money Institution Insolvency (Amendment) Regulations 2023 (S.I. 2023/1399), regs. 1(2), 20)
  4. C346S. 126(2) modified (S.) (6.4.2001) by S.S.I. 2001/128, reg. 4(2), Sch. 3