Application to restrain advertisement of winding up petition refused

The petition debt was in respect of a £500,000 loan made by the respondent to the firm under a loan agreement.

The underlying dispute arose from the parties’ dealings in connection with prospective claims based on the alleged misuse of personal data belonging to professional athletes. A company had been incorporated to pursue those claims. 

The firm alleged that it had been engaged to act as that company’s solicitors in the claims and to search for litigation funding. No personal data claims had been issued at the time of the application.

In its application the firm submitted that:

1. It had been given assurances, both oral and written, by the respondent that the loan agreement would not be enforced which it had relied upon.
2. It had cross-claims exceeding the petition debt.
3. The petition was an abuse of process as the respondent was not seeking a winding up order in the interest of creditors. The evidence relied upon by the respondent was a file note of a call with the respondent which showed animosity between the firm and respondent.

The court held that:

1. There was documentary evidence which was inconsistent with the firm holding any belief the repayment terms would not be enforced
2. Based on the evidence before it, the crossclaims had poor prospects of success.
3. Animosity was not unusual and did not in itself support the allegation that the petition was an abuse of process.

The firm’s application was refused as the court concluded there was no substantial dispute over the petition debt.

In reference to IPS Law LLP v Safe Harbour Equity Distressed Debt Fund 3 LP [2024] EWHC 2663 (Ch).