It is trite law that the court will grant an injunction restraining the advertisement of a winding-up petition where the petition amounts to an abuse of process.

In the case of Re a Company (no 001573 of 1983) [1983] 1 BCC 98937, Mr Justice Harman held that if a petition is genuinely for the benefit of a class of creditors generally, ill motive or malice on the part of the petitioner will not render the petition improper. In that case, the petition was improper because it was designed to confer on the petitioner an advantage not shared by the other creditors - the petitioner issued it with the collateral purpose of causing the forfeiture of the company’s leasehold premises, which the petitioner intended to rent for itself. 

In the recent case of Astra Resources Plc -v- Credit Veritas USA LLC  the court was faced with an application by the debtor for an injunction to restrain the presentation of a winding-up petition by Credit Veritas and once again had to consider the ‘collateral purpose’ argument.

The Facts 

In early January 2015 Astra Resources applied for an injunction to restrain the presentation of a winding-up petition.  At a hearing in mid-January, Credit Veritas gave an undertaking not to present a petition pending a full hearing of the company’s application.  The application sought that Credit Veritas should be restrained from presenting a petition on two grounds.  The second ground provided that Credit Veritas had a collateral/improper purpose in seeking to present the winding-up petition which should disqualify it from doing so.  The allegation of improper purpose focused on an email from a director of Credit Veritas to a director of the company – the latter had invested personal funds in the company and was concerned that he might lose that investment.  Essentially Credit Veritas was proposing to force the company into liquidation in order to put forward a plan to reorganise it, potentially allowing for Astra’s shareholders to recoup their investment.

The Decision

Mr Justice David Richards noted that the crucial point here was that any such reorganisation could only be achieved through the proper process of a liquidation; it would require the support of the liquidator and the support of a majority of the creditors and, if a scheme of arrangement were to be proposed, the approval of the court on the basis of the fairness of the proposals. 

Accordingly, the judge concluded that it would not be an abuse of process for Credit Veritas to present a winding-up petition on this basis.


In general terms, providing that the purpose of a winding-up petition is to achieve an outcome consistent with the proper process of a winding-up the court is unlikely to consider it to be an abuse of process, even if the Petitioner is motivated by a collateral purpose – as long as that sole creditor was not the sole beneficiary.