Key Point

An English Court holds that a rate saving scheme involving liquidations of tenant companies is an abuse of the English insolvency legislation.

The Facts

PAG Management Services Limited (the “Company”) managed and co-ordinated a business rates mitigation scheme, which exploited the exemption for tenant companies in voluntary liquidation: the Company would ensure that the liquidations of tenant companies continued indefinitely for the benefit of their landlords. The Secretary of State for Business, Innovation and Skills presented a winding-up  petition against the Company on the grounds of public interest.

The Decision

The purpose of liquidation is the collection, realisation and distribution of company assets to its creditors, not to shelter assets such as (in this case) commercial properties from rates indefinitely for the purposes of profit for a third party.

There is a clear public interest in ensuring that the purpose of liquidations is not subverted. The Court therefore ordered that the Company be wound-up on the grounds of public interest for the misuse of insolvency legislation.


The case is useful guidance as to the limits of liquidation, being a genuine collection and distribution of company assets, which should be borne in mind when considering the legitimacy of restructuring schemes where companies may be wound up to distribute assets or for tax purposes.

PAG Management Services Limited