The Facts

RBK Engineering Ltd served a winding up petition on Breyer Group Plc, a construction company and contractual counterparty, alleging that it owed £258,729.16 and had admitted its insolvency. Breyer Group Plc applied to strike out the winding up petition on the basis that it was an abuse of process. It argued that it was solvent and had substantial counterclaims of its own.

The Decision

  • On the basis that Breyer Group Plc had consistently posted profits, had access to a substantial (and unused) credit facility and had transferred the whole of the disputed sum to its solicitors when the winding up petition was not withdrawn, it was not insolvent. At all material times, it could not be said that Breyer Group Plc could not pay the debt
  • There was a genuine dispute as to the payment regime under the contract to which RBK Engineering Ltd and Breyer Group Plc were party. In addition, Breyer Group Plc had raised concerns as to the work of RBK Engineering Ltd and, while they could not be resolved at the immediate hearing, they supported the existence of counterclaims
  • The winding up petition was therefore struck out on the basis that Breyer Group Plc appeared to be solvent and the proper forum for resolving the disputes was Adjudication under the Scheme for Construction Contracts or proceedings in the High Court.

Comment

The decision is a sensible restatement of the law that winding up proceedings are not the place for resolving genuinely disputed debt claims and that the Court will assess, as far as it reasonably can, the legitimacy of winding up petitions and counterclaims. The Court took a robust approach here to combat the injustice that could be caused by allowing RBK Engineering Ltd to assert illegitimate commercial pressure for payment.

Breyer Group Plc v RBK Engineering Ltd [2017] EWHC 1206 (Ch)