Alison Beard and Martin Lord acted for Diamond Hangar Limited (“Diamond”) in obtaining the rescission of a winding up Order at a hearing before His Honour Judge Worster on 17 January 2019.
Diamond operates a 250,000 square foot hangar at Stanstead leased from Stanstead Airport Limited, a subsidiary of Manchester Airport Group PLC (“MAG”). The winding up order was made on 4 December 2018 on the hearing of the petition of a trade creditor presented in October 2018 in respect of an unpaid invoice for £34,800.
The Court’s power to rescind a winding up order is discretionary and is rarely exercised. The principles which govern the exercise of the Court’s discretion were summarised in Re Metrocab Limited  B.I.P.R. 1368 and provide that the power should be exercised with caution and only in exceptional circumstances involving a material difference from those before the Court at the time of the winding up Order. There is no limit to the factors the Court is entitled to take into account but it is not sufficient simply to show that the debt of the petitioning creditor and the costs of the Official Receiver or Liquidator have been paid; the company must be shown to be solvent on the basis that it can pay its debts as they fall due. Further, the affairs of the company must be shown to have been above-board so that no investigation is necessary.
Diamond is supported financially by a wealthy individual who paid substantial debts on its behalf prior to and after the winding up. The same individual deposited funds with Diamond’s Solicitors to enable it to discharge creditors’ claims and the costs of the winding up if the application was successful and to assist trading afterwards.
Only MAG opposed the application claiming that: Diamond was insolvent; the circumstances were not exceptional; there had been no material change in circumstances since the winding up order was made; and, there were suspicious matters which required investigation.
The judge decided that Diamond was able to pay its debts in view of the financial support provided and was greatly reassured by work done by Martin Lord in contacting creditors, agreeing their claims and planning for payment. The judge also decided that there was a material change in circumstances in that the funds had been deposited with Diamond’s Solicitors and had information concerning Diamond’s ability to fund itself been before the Court at the winding up hearing it is unlikely that an order would have been made.
MAG raised several issues and errors in financial information which it considered were suspicious and required investigation. The judge decided that the errors were a result of poor management prior to the winding up which was brought about by the illness of its managing director who was Diamond’s only UK-based director. He considered that the Court needed to be satisfied that the problems would not reoccur and consequently ordered that the recession was conditional on the appointment as an additional director who was professionally qualified, a UK resident and independent of Diamond’s shareholders.
The Order rescinding the winding up order was made on 6 February 2019.