Emergency insolvency application helps to ensure care workers can be paid

Written 9th April 2020 by Stephen Chinnery

Olliers’ Stephen Chinnery appeared before Judge Burton today in an emergency application to seek the dismissal of a winding up petition.  The hearing took place in the Insolvency and Companies List to secure the dismissal of a winding up petition (brought by HMRC) against a company that employs care workers for the elderly and vulnerable.

Hearing conducted remotely

The hearing was conducted remotely with the parties attending by Skype conference.  In fact the Judge expressed her general satisfaction with the way in which remote hearings were being conducted.  From the electronic filing of applications, skeleton arguments and hearing bundles to the convenience of parties attending from the comfort of their living rooms this must surely be a harbinger of the way more court hearings will be conducted in the future.

Emergency application to dismiss winding up petition

The pandemic has resulted in all winding up petitions being adjourned until June and July. In this particular instance the petition was adjourned until July. HMRC had agreed to withdrawn the petition and that was anticipated to have happened at the end of March at the first hearing. The petition was not advertised as it had been paid in full.

Although the petition was not advertised the listing of the first hearing caused the company’s bankers to freeze the bank account. This meant that staff caring for the most vulnerable people in society right now were going unpaid.

HMRC’s position was that whilst they supported the dismissal of the petition they operated a policy not to apply to the court to either withdraw or seek the dismissal of petitions.

It became clear that there is no express provision in the Insolvency Rules to allow a respondent to a petition to apply for a dismissal.

Relevant legislation

In looking at the basis upon which the company could make an application to abridge time between now and the adjourned hearing in July 2020 and dismiss the petition the following was relevant.

Firstly, Rule 12.2(2) of the Insolvency Rules 2016 applies:

The registrar or District Judge may authorise any act of a formal or administrative character which is not by statute that person’s responsibility to be carried out by the chief clerk or any other officer of the court acting on that person’s behalf, in accordance with directions given by the Lord Chancellor.

The Rule in 12.2 would appear to allow the registrar or District Judge the authority to allow those that act on behalf of the company to make the present application to dismiss the petition.

Secondly, Paragraph 3, Schedule 5 of the Insolvency Rules 2016 states:

The provisions of CPR rule 3.1(2)(a)(2) (the court’s general powers of management) apply so as to enable the court to extend or shorten the time for compliance with anything required or authorised to be done by these Rules.

The rule in paragraph 3, schedule 5 would appear to allow the court to abridge time between now and the hearing of the petition on 04 July 2020.

In addition the court has the benefit of Rule 12.10(2) of the Insolvency Rules 2016 where the matter is urgent.

The application may be heard on terms providing for the filing or service of documents, notification, or the carrying out of other formalities as the court thinks just.

Mr Chinnery submitted that in the circumstances it would be manifestly just to allow the present application for abridgement of time and for the dismissal of the petition.

Successful application

In the event the court granted the application and no doubt the company will shortly be able to pay its workers.

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