Impact of COVID-19 on the Court system and proposed restrictions on the use of insolvency processes cannot be used as reasons to restrain the presentation of a Winding Up Petition

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Impact of COVID-19 on the Court system and proposed restrictions on the use of insolvency processes cannot be used as reasons to restrain the presentation of a Winding Up Petition

In the recent case of Re Saint Benedict’s Land Trust Ltd; Re Shorts Gardens LLP, an application to restrain the presentation of a winding-up petition was dismissed by the Court.

It was held that there was no substantial dispute on genuine grounds relating to either of the petition debts. Particularly noteworthy was the fact that it was held that the impact of coronavirus on the court system and proposed restrictions on the use of insolvency processes were not good enough reasons to grant an injunction preventing the presentation of a winding-up petition.

Whilst the applicants alleged the debt was genuinely disputed on substantial grounds and that it was inappropriate for any petition to proceed until 14 days after coronavirus has been controlled by either a vaccination or the government, and both applicants filed evidence suggesting they were suffering financial difficulty as a result of the global pandemic. The Court decided there was no genuine dispute relating to the debts and, as there was no legislation restricting the use of insolvency processes, the Court must apply the law as it stood.

This decision suggests the Court is wary of placing significant weight on the “proposed measures” to restrict the use of insolvency processes’ yet to be brought into force and as such all Companies should treat any service of insolvency documentation upon them with the utmost of urgency and seek immediate legal advice.

It is therefore advisable that anyone seeking to rely on the new announcements and proposed changes pay close attention to the language actually used to determine what the proposed measures are intended to achieve.

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