Court refuses to grant injunction restraining presentation of winding up petitions on grounds of coronavirus

On May 2020, the Court considered two applications for injunctions to restrain presentation of a winding up petition. The petitions were based on unpaid rates and costs awards. The applicants claimed that the debts were genuinely disputed and that the companies were suffering financial difficulties as a consequence of the coronavirus pandemic.

The applicants argued that given the Government’s indication that it intended to enact urgent legislation to restrict presentation of winding up petitions during the pandemic, the Court should exercise its discretion in favour of granting the injunctions. 

Mr Justice Snowdon dismissed the applications.

In one case the application had been presented by the director/shareholder. The Court held that a position as a director or as a shareholder does not give an individual sufficient personal interest to apply for an injunction. Only the company itself could apply.

The applicants had relied on press statements from the Government which indicated that the proposed legislation was intended to stop aggressive rent collection tactics in respect of retail or hospitality tenants. The applicants argued that the Court could read the statement in such a way as to indicate that the restriction would go further and extend to the applicant companies and their debts and that therefore the judge should exercise his discretion in light of the anticipated legislation.

However Mr Justice Snowdon declined to read the press statement in a wider fashion (in fact as it has transpired, the new restrictions on winding up petitions are not just limited to the retail and hospitality sectors, but this was not widely expected at the time of the judgment).

In any event, the Court dismissed the evidence which had been adduced about the economic impact of Covid-19 on the companies, since the evidence did not in fact demonstrate that the companies could not pay their debts because of Covid-19 and that their difficulties pre-dated the pandemic.

In re St Benedict’s Land Trust Limited, Re Shorts Gardens LLP [2020] EWHC 1001 (Ch)
Judgment 27 April 2020

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