(1)An unregistered company is deemed (for purposes of section 221) unable to pay its debts—
(a)if in England and Wales execution or other process issued on a judgment, decree or order obtained in any court in favour of a creditor against the company, or any member of it as such, or any person authorised to be sued as nominal defendant on behalf of the company, is returned unsatisfied;
(b)if in Scotland the induciae of a charge for payment on an extract decree, or an extract registered bond, or an extract registered protest, have expired without payment being made;
(c)if in Northern Ireland a certificate of unenforceability has been granted in respect of any judgment, decree or order obtained as mentioned in paragraph (a);
(d)if it is otherwise proved to the satisfaction of the court that the company is unable to pay its debts as they fall due.
(2)An unregistered company is also deemed unable to pay its debts if it is proved to the satisfaction of the court that the value of the company’s assets is less than the amount of its liabilities, taking into account its contingent and prospective liabilities.
Cases considering section 224 4
[2022] EWHC 2914 (Ch) · 17 November 2022
Confirms that section 224 provides alternative methods of establishing inability to pay debts under article 7, without requiring a statutory demand. (see para [46])
Confirms that inability to pay debts as they fall due is an available ground under the article 7 regime. (see para [46])
Confirms that balance-sheet insolvency is also available under the article 7 regime. (see para [46])
[2013] EWHC 4291 (Ch) · 20 November 2013Defines
The judgment adopts the distinction that a creditor whose debt is genuinely disputed on substantial grounds cannot establish the standing required to present a winding-up petition under the statutory scheme. The point supports the refusal to use winding-up proceedings to adjudicate the disputed debt (see para [9]).
[2011] EWHC 3423 (Ch) · 21 December 2011
Applies the cash-flow test in section 224 and finds the partnership unable to pay its debts as they fell due. The common ground and evidence satisfied the requirement for an administration order (see paras [64], [69]).
What each judgment says about section 224 is in the case-law panel in the full Act.