Bridger & Co Ltd v Specialist Lending Ltd (t/a Dologi) [2023]
Bridger & Co Ltd v Specialist Lending Ltd (t/a Dologi) [2023] is an example of the court declining to make an injunction to restrain advertisement of a winding up petition. The petition was presented against a law firm, Bridger & Co Ltd (the Company) for a debt arising out of a funding agreement. The Company applied to restrain the advertisement of the petition pursuant to rule 7.24 of the Insolvency (England and Wales) Rules 2016 on a number of grounds.
The judgment provides some useful guidance on matters relating to contested winding up petition proceedings, including the court’s approach to the evidence and the strength of the dispute.
In March 2020, the Company entered into a contract described as a “disbursement funding agreement” with Specialist Lending Limited (Petitioner). Under this contract the Petitioner would advance money to the Company to fund disbursements to enable its clients to pursue claims relating to cavity wall insulation (CWI Claims).
In May 2023, the Petitioner served a statutory demand seeking approximately £2.2m under the contract. The Petitioner subsequently presented and served a winding up petition on the Company. The Company applied for an injunction to restrain notice of the petition.
The judge considered the following issues:
The parties agreed that the principles set out in established case law relating to an application seeking to restrain presentation of a winding up petition were equally applicable to an application to restrain advertisement.
The judge considered that the essential question, based on the arguments of the Company in this case, was whether:
The judge summarised that the fundamental point, in relation to whether there was a debt due from the Company, was who assumed the risk that the CWI Claims would not lead to recoveries relatively quickly.
By applying the principles set out in established case law, and on considering the evidence, the judge dismissed each of the arguments raised by the Company that there was not a debt due, and in doing so found that there was no substantial dispute over the petition debt. In addition, the court found that there was nothing in the evidence to indicate that the petition had been presented as an abuse of process – i.e. for some purpose other than the purpose of obtaining a winding up order. The judge did not accept that the mere fact that the Petitioner knew that the Company would raise a dispute was sufficient to render the petition an abuse. The judge stated that if the debtor’s argument is not a good one, and does not disclose a substantial dispute, then it is not an abuse to present a petition.
In considering the evidence, the judge stated that in a hearing of this kind the court will take the Company’s evidence at its highest and assume that it would come up to proof at trial, save where it is incredible or is contradicted by contemporaneous documents. Notwithstanding this, the judge found that, on the evidence provided to the court, the Company had advanced no substantial dispute.
The judge also considered the Petitioner’s security interest in the CWI Claims that it had funded. The judge referred to prior case law and the lack of any express statutory restriction preventing a petition based on a secured debt. The judge found that the Petitioner had standing to present the petition and to be heard on it, even if it had security for the petition debt.
The judge therefore dismissed the application for an injunction to restrain the advertisement of the petition.
This case includes a useful run through of the established principles relevant to a disputed winding up petition, and the application of those principles to establish whether a creditor has standing to bring a petition. The outcome is also a reminder to debtors that a petition will not be struck out merely because a debtor company alleges that the debt is disputed, the court will be alert to debtors who seek to raise a cloud of objections as a means to claim the existence of a dispute.
