Kerry Underwood

INSOLVENCY: DIRECTORS AND SHAREHOLDERS CANNOT APPLY FOR INJUNCTION AGAINST PRESENTING A WINDING-UP PETITION

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Kerry Underwood offers consultancy services in relation to this and other matters and details are here.

In

Shorts Gardens LLB v London Borough of Camden Council [2020] EWHC 1001 (Ch)

the High Court held that simply being a director or shareholder of a company does not give an individual sufficient personal interest to apply for an injunction to prevent winding-up proceedings against the company.

The right to dispute a winding-up petition is the right of a company and not the right of a director or shareholder.

Directors are not personally entitled to any benefit because of holding office, and the making of a winding-up order does not deprive shareholders of their shares.

Accordingly, the court refused the director/shareholder’s applications in this case, which had sought to restrain presentation of winding-up petitions against two entities owned by her.

The court also held that, on the facts the applications were an abuse of process.

In particular, one application had been made by the director/shareholder precisely because the company itself was subject to a general civil restraint order barring it from making any application to the High Court without first obtaining the permission of a nominated judge.

The court noted that disobedience of a civil restraint order is capable of being a contempt of court by the person who is the subject of the order.

Depending on the circumstances, a director/shareholder who seeks to assist their company to evade a civil restraint order by making an application in place of the company may also be committing a contempt of court although the judge did not pursue the contempt issue further.

 

Underwoods Solicitors are the solicitors for Crowe UK LLP, the Joint Liquidators of the Cambridge Analytica Group of Companies

Written by kerryunderwood

May 8, 2020 at 8:49 am

Posted in Uncategorized

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