IPS Law LLP v Safe Harbour Equity Distressed Debt Fund 3 LP
[2024] EWHC 2663 (Ch)
Bridger & Co Limited v Specialist Lending Limited (t/a Duologi)
10 October 2023
[2023] EWHC 2562 (Ch)
High Court
A company tried to stop a creditor from advertising a petition to shut it down because of a debt. The judge said the company didn't have a good enough reason to stop the advertisement, even though the creditor had some security for the debt. The creditor can still try to shut the company down.
Key Facts
- •Bridger & Co Limited (Company) applied for an injunction to restrain advertisement of a winding-up petition presented by Specialist Lending Limited (Petitioner).
- •The petition is based on a £2.2 million debt under a disbursement funding agreement (DFA).
- •The Company disputes the debt, raising arguments of misrepresentation, implied terms, frustration, agency, repudiation, force majeure, and abuse of process.
- •The DFA includes a clause requiring repayment within 24 months of disbursement, with an event of default triggering immediate payment.
- •The Petitioner holds security over the CWI claims funded by the DFA.
Legal Principles
Test for restraining advertisement of a winding-up petition: A substantial dispute as to the entirety of the petition debt (or a portion bringing the undisputed amount below £750) must exist, raised in good faith and with a rational prospect of success.
Angel Group Ltd v British Gas Trading Ltd [2012] EWHC 2702 (Ch)
Principles of actionable misrepresentation: A false statement of fact that induces the other party.
Chitty on Contracts, 34th edn, §9-006
Implied terms: A term will not be implied unless it is necessary to give business efficacy to the contract or is so obvious it goes without saying.
Yoo Design Services Ltd v Iliv Realty Pte Limited [2021] EWCA Civ 560
Frustration: A supervening event, without default of either party and for which the contract makes no provision, so significantly changes the nature of the contract that it would be unjust to hold them to the strict terms.
National Carriers Ltd v Panalpina (Northern) Ltd [1981] AC 675
Abuse of process: A winding-up petition is an abuse of process if presented not to obtain a winding-up order but for another purpose.
Re Majory (a debtor) [1955] Ch 600; Ebbvale Limited v Hosking [2013] UKPC 1
Secured creditor's standing to petition: A secured creditor can petition for winding up even if they have security for the debt.
Re Lafayette Electronics Europe Ltd [2006] EWHC 1006; Re Sushinho Ltd [2011] All ER (D) 32 (Mar)
Outcomes
The application to restrain advertisement of the winding-up petition was refused.
The court found that none of the Company's arguments (misrepresentation, implied terms, frustration, agency, repudiation, force majeure, abuse of process) disclosed a substantial dispute sufficient to justify restraining advertisement. The Petitioner's security did not affect its standing to petition.
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