Public Interest Winding-Up Petitions - Legal Advice

Under s 124A Insolvency Act 1986, the Secretary of State may present a winding-up petition on a company on the grounds that it is in the public interest that that company be wound up. The court will allow the presentation of this petition only if it thinks it is just and equitable to do so.

The Secretary of State must prove to the court that, on the balance of probabilities, there is sufficient evidence that it is just and equitable for the company to be wound up. Usually, the Secretary of State relies on evidence recovered during the Insolvency Service’s investigations into the company’s conduct.

It is established from the case of Re Portfolios of Distinction Limited [2006] EWHC 782 Ch that the question is whether the company’s conduct is “inherently objectionable”. Normally, these cases involve companies that take advantage of members of the public, often inducing them to enter into agreements that will be of no benefit to them.

The company in question may submit evidence to help tip the balance of probabilities in their favour. This could be done by disputing the evidence provided by the Secretary of State or by revisiting and altering their business model.