Vol 17 (2020) - Issue 4

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Two Cases on Restraining a Winding up Petition

Synopsis
In response to the increased pressure on UK companies resulting from the COVID-19 pandemic, the government announced on 23 April 2020 that temporary legislative measures would be introduced in order to safeguard companies from 'aggressive rent collection' (the 'April Press Release'), by (among other things) suspending the use of statutory demands and winding up petitions in respect of commercial tenants.

On 20 May 2020, the Corporate Insolvency and Governance Bill (the 'CIG Bill') was published, setting out these measures as well as introducing long-awaited wholescale reforms to the UK's restructuring toolbox.

In this case note, we discuss two recent cases in which the courts were willing to restrain the presentation of creditors' petitions on the basis that they would have fallen foul of the restrictions on winding up petitions contemplated in the CIG Bill, despite the fact that, at the time those decisions were handed down, that bill was not yet law: Travelodge Hotels Limited v Prime Aesthetics Limited, Prime Hotels Limited, Orbital Estates Limited [2020] EWHC 1217 (Ch) (Birss J), and Re: A Company (Injunction To Restrain Presentation of Petition) [2020] EWHC 1406 (Ch) (Morgan J).

Following the handing down of the decisions considered in this note, the Corporate Insolvency and Governance Act 2020 received Royal Assent (on 25 June 2020), and came into force the following day (26 June 2020).