In the recent case of Secretary of State for Business, Innovation & Skills v Hawkhurst Capital plc [2013] EWHC 4219 the High Court appointed a provisional liquidator on a petition to wind up a company on public interest grounds, even though the petitioner had not offered a cross-undertaking in damages.
On 4 September 2013 the Secretary of State for Business, Innovation and Skills presented a winding up petition against Hawkhurst Capital plc citing public interest grounds. The return date for the petition was 5 November 2013. Hawkhurst was allegedly involved in a scheme whereby clients could obtain early access to their pension funds before their pensionable age, in return for buying shares in the company. The grounds the Secretary of State relied upon to wind up the company on public interest grounds were as follows:
• There was a lack of transparency in relation to the company’s activities and its role in the scheme;
• Inaccurate and/or misleading accounts had been filed;
• There was a risk that individuals had been misled or could be misled as to the nature and risks of the scheme; and
• The company’s only active director had failed to cooperate with investigators, he had provided limited documentation and he had refused to answer questions during interview.
In this case the High Court considered that a provisional liquidator should be appointed on public interest grounds, even though the Secretary of State had not offered a cross undertaking in damages. The Official Receiver was appointed as provisional liquidator, pending the full hearing of the winding up petition, with a view to bringing the scheme to an end, to prevent the dissipation of any scheme funds, to take the company and its assets out of the control of its directors and to enable a full investigation into the company’s affairs and finances.
The Court considered that an alternative form of relief to the appointment of a provisional liquidator (such as an injunction prohibiting the trading practices complained of) would not be appropriate because of the lack of transparency and cooperation between the parties. The recent decision is a useful reminder of the issues the Court will consider when considering a petition to wind up a company on public interest grounds.
If you require further information regarding winding up petitions or insolvency issues generally, or so-called pension release schemes, please speak to Rachel Brown or Julian Johnstone of Druces LLP’s Litigation team, or Richard Baines, of Druces LLP’s Corporate Restructuring and Insolvency team.
