This will put the wind up you!

And no, I’m not talking about the collapse of the Windies at Lords last Friday which left me bereft. Not because I was disappointed that England won (at least we can still win something) but more that it collapsed before I got to enjoy a day of corporate hospitality (i.e. a lot of champagne) on Saturday. Mind you, I’m a very positive person – I don’t do the “glass is half full or half empty” idea – because the glass is always refillable. So, it was better that it ended on Friday afternoon and I got a full refund, than it went into a few hours on Saturday and I paid the full price for only half an hour of bubbles.

But that was not what I was referring to.

I was actually thinking of winding up petitions, and how things have changed.

Historically, you only served a statutory demand or issued a winding up petition if you were certain you could show that the debt was admitted, or at least not disputed, because the courts gave a very wide interpretation to what amounted to a dispute. They were very reluctant to allow a petition to continue if there was even the merest hint of a possible defence and/or counterclaim.

In recent months, however, it felt like things were changing. In the last six months we’ve represented a number of clients who have been pursuing debts through the insolvency courts, where our actions have been disputed by the other side. Every time we’ve gone in front of a Judge, we’ve won. Obviously I attribute that to the hard work and dedication of my team, and the fact (of course) that we were in the right. However, it appears that we’ve had some additional help in the form of a change in perspective from the Judges themselves. In a recent Supreme Court decision, it was reported that the practice of the English Courts of staying or dismissing a creditors winding up petition based on a wide interpretation of ‘a disputed debt’ should stop. And quite right too.

What is also interesting is the number of cases where the debt is not disputed, and the company clearly cannot pay it’s debts as they fall due, but the insolvency courts are giving more latitude than previously. In particular, where there is evidence that the company (or it’s directors personally) can provide evidence that they are trying to raise the funds to pay the creditors off, with some indication of possible success, the courts are willing to give more time.

So not only are the winds blowing, but the tides are turning too! If you’re involved in chasing people to pay you, it may be that insolvency proceedings are more effective than they might have been previously. It is going to be harder for companies to fob you off with a weak defence. If you are at risk of a petition, but you think your company is worth saving, then don’t give up once the petition is issued. There may still be hope. In either eventuality, it may be worth us having a chat, or I can put you in touch with people who can help you.

Kleyman & Co Solicitors. The full service law firm. Always hot and sunny!