Lawrence Dallaglio Ltd Petition Dismissed & Liquidator Appointed

In a recent development, Lawrence Dallaglio Limited, a company linked to former England rugby union star Lawrence Dallaglio, and which was facing a HMRC winding-up petition since 7 March 2023 applied on 2 August 2023 for a Creditors’ Voluntary Liquidation (CVL); as of 24 October 2023 a voluntary liquidator was appointed (Martin Charles Armstrong and Simon James Underwood of Turpin Barker Armstrong Accountants).

The process of a CVL begins when a company faces insolvency, indicating its inability to meet its financial obligations in a timely manner. In such circumstances, the company’s directors are obligated to call a meeting with shareholders, during which they collectively pass a resolution to voluntarily dissolve the company. Subsequently, a liquidator is appointed to oversee the entire process, including the realisation of company assets and the methodical distribution of the proceeds among creditors, adhering to a predefined hierarchy as stipulated by insolvency regulations and legal frameworks.

The barrister representing HMRC, Mr Cockburn, informed the ICC Judge about the voluntary liquidation; leading to the petition being dismissed as is the norm on a successful CVL application.

The former rugby star with 85 England caps, was listed as a company director for Lawrence Dallaglio Limited, but he was not present at the HMRC petition hearing. Notably, this isn’t the first time Lawrence Dallaglio has faced financial challenges.

In a previous case, a bankruptcy petition lodged by tax officials was dismissed by Judge Sebastian Prentis in a different hearing at the Insolvency and Companies Court. At that time, it was revealed that Dallaglio owed approximately £700,000 in taxes.

What is Voluntary Liquidation?

Voluntary liquidation is a legal process through which a company or organisation is intentionally and voluntarily wound up or dissolved by its owners or shareholders. This typically occurs when the company is no longer financially viable, and its owners or shareholders decide to cease its operations and distribute its assets and resources among its creditors and shareholders.

There are two main types of voluntary liquidation:

1. Members’ Voluntary Liquidation (MVL): This type of voluntary liquidation is initiated when a company is still solvent and can pay off its debts and liabilities in full. The shareholders typically pass a special resolution to wind up the company voluntarily. An appointed liquidator is responsible for selling the company’s assets, paying off creditors, and distributing the remaining assets to the shareholders. This process is often used when business owners want to retire, restructure, or close a company with substantial assets.
2. Creditors’ Voluntary Liquidation (CVL): A CVL is initiated when a company is insolvent, meaning it cannot pay its debts as they become due. In this case, the company’s directors must convene a meeting with the shareholders, and they pass a resolution to wind up the company voluntarily. A liquidator is appointed to manage the process, realize the assets, and distribute the proceeds to creditors according to a specific hierarchy established by insolvency laws.

Voluntary liquidation is distinct from involuntary or compulsory liquidation, where a court or government authority forces the liquidation of a company due to its insolvency or other legal reasons.

The voluntary liquidation process is subject to specific legal and regulatory requirements, and it is important to follow these procedures to ensure that the company’s assets are distributed properly and in accordance with the law. Additionally, the involvement of a licensed insolvency practitioner or liquidator is usually necessary to oversee and manage the liquidation process.

Why Lawrence Dallaglio Ltd Entered into a CVL?

HMRC lodged a winding-up petition against the company, which was dismissed by Judge Sally Barber in the Insolvency and Companies Court in London due to the CVL.

What are the reasons for Voluntary Liquidation?

This process serves various objectives:

1. Financial Challenges: Lawrence Dallaglio Limited’s decision to pursue voluntary liquidation is a response to the financial hurdles it faced. This highlights how the process can be a valuable tool for addressing financial woes.

2. Court Petition Dismissal: The dismissal of the winding-up petition demonstrates the company’s decision to take control of its financial future through voluntary liquidation, rather than being compelled by external pressures.

3. Creditor and Shareholder Resolution: Voluntary liquidation enables the company to systematically address debts and fairly distribute any remaining assets among creditors and shareholders.

4. Directors’ Responsibility: Company directors play a pivotal role in voluntary liquidation by making a statutory declaration of the company’s solvency. Ensuring the accuracy of this declaration is vital to avoid personal liability.

5. Legal Compliance: The process is tightly regulated and requires oversight from a licensed insolvency practitioner who ensures compliance with the law, including asset realization, debt settlement, and equitable fund distribution.

If your company is contemplating voluntary liquidation or other corporate legal actions, our expert insolvency law team at Lexlaw is ready to guide you through the process with precision and compliance. We are leading experts specialising in insolvency proceedings. Our chancery solicitors and barristers have decades of experience in Insolvency and Winding-up Petition law and have advised on many hundreds of cases. Our in-house insolvency barrister has succeeded in leading cases including before the Court of Appeal. Our Senior Partner has worked at KMPG, Goldman Sachs and ING Barings and is dual-qualified as a Solicitor-Advocate and Barrister. Both lawyers have regularly appear on and manage Winding-up Petition cases and will be available to you at the outset in your first advice conference; when accurate legal advice matters the most in ensuring a sure-footed legal strategy going forwards.