Winding up proceedings: the court takes matters into its own hands

A recent case involving the winding up of an Industrial and Provident Society demonstrates that a court may make a winding up order on its own motion, if it is considered to be in the public interest to do so.

In an unusual move the High Court recently wound up a credit union on its own motion. Despite some procedural irregularities with the winding up petition, it was felt that the exceptional facts of this particular case justified the measure.

The case concerned a credit union registered under the Industrial and Provident Societies Act 1965 (those Industrial and Provident Societies that are charities are exempt charities – they cannot register with the Charity Commission but are otherwise subject to charity law). The board of the union petitioned a winding up order because the union was insolvent as a result of an embezzlement of funds by one of the directors. A board meeting was arranged for the directors to agree to the winding up petition. The director guilty of embezzlement, however, who no longer participated in the running of the company, was not given notice for the meeting. Consequently, the petition was flawed as it did not satisfy the established condition that such a petition should be presented by the directors acting unanimously.

In spite of the above problem, the court decided that in this particular case, there was sufficient justification to proceed with a winding up order. The primary reason for the High Court making this decision was that it was in the public interest to preserve the union’s assets so far as possible for the benefit of its members.

Although it is unlikely that the court would be prepared to use this power again in other cases where a winding up petition is defective, the case demonstrates that it may be prepared to do so if there is a strong public interest reason behind it.

How can we help you?

If you would like to discuss any issues raised by this article, please contact Emma Watson on 01223 222218 or [email protected].

Our content explained

Every piece of content we create is correct on the date it’s published but please don’t rely on it as legal advice. If you’d like to speak to us about your own legal requirements, please contact one of our expert lawyers.

Mills & Reeve Sites navigation
A tabbed collection of Mills & Reeve sites.
My Mills & Reeve navigation
Subscribe to, or manage your My Mills & Reeve account.
My M&R


Register for My M&R to stay up-to-date with legal news and events, create brochures and bookmark pages.

Existing clients

Log in to your client extranet for free matter information, know-how and documents.


Mills & Reeve system for employees.