New CEO at the Bank of London Following HMRC Winding-Up Petition

The Bank of London, a prominent fintech clearing bank, has appointed Christopher Horne as its new Chief Executive Officer (CEO). Horne, the former CEO of Credit Suisse’s UK subsidiaries, steps in after the bank faced financial turbulence, including a winding-up petition filed by HMRC due to unpaid taxes.

This appointment marks a significant turning point for the bank, following intervention by Mangrove Capital Partners, a Luxembourg-based venture capital firm. Mangrove injected £42 million in new capital as part of a larger £60 million funding initiative, which helped address immediate financial concerns and enabled a governance restructuring.

The bank had previously faced instability, compounded by the departure of its founder, Anthony Watson, and the exit of several key board members, including Peter Mandelson and Harvey Schwarz, CEO of Carlyle Group. Under Mangrove’s control, significant leadership changes have been made, setting a course for the bank’s long-term recovery and growth. This development underscores the importance of strong governance and financial resilience in navigating challenges such as winding-up petitions.

HMRC initiated insolvency proceedings against the Bank of London on 5 September 2024 over unpaid tax debts. However, the Bank of London reportedly settled the debt shortly thereafter, leading to the petition being withdrawn just 4 days later.

Why Does HMRC Issue Winding-Up Petitions?

HMRC can issue a winding-up petition against companies owing £750 or more in unpaid taxes. To proceed, HMRC must show that the company is unable to pay the debt. Common tax liabilities that can lead to a petition include:

• Unpaid VAT assessments
• Outstanding PAYE payments
• Employer’s National Insurance Contributions
• Unpaid Corporation Tax

HMRC generally issues winding-up petitions as a last resort after attempting other debt recovery methods. HMRC’s preferred approach is often to negotiate a Time to Pay (TTP) arrangement with the business directors, provided the company is making genuine efforts to repay its debts. If a TTP is not agreed upon, HMRC may resort to distraint, seizing goods to recover the unpaid tax. It is only after these methods fail that HMRC typically pursues a winding-up petition.

If you are facing a winding-up petition from HMRC, it is vital to act promptly and seek legal advice to understand your options. Early intervention can help mitigate the severe financial consequences of a winding-up order.

What is a Time to Pay Agreement with HMRC?

A Time to Pay (TTP) agreement with HMRC can be a lifeline for businesses struggling with tax debts, particularly in difficult economic times. To secure a TTP, companies must present a clear repayment plan, demonstrate a willingness to meet their financial obligations, and engage with HMRC transparently.

Early discussions with HMRC, combined with a well-structured plan, can increase the likelihood of reaching an agreement. Our law firm specialises in helping businesses negotiate favourable TTP terms, ensuring a robust approach to resolve tax liabilities while protecting your company’s financial stability.

What Happens to a Business if it is Wound Up?

A winding-up petition leads to compulsory liquidation, where a creditor seeks to shut down the business. If the Court grants a winding-up order, it typically marks the end for the company. Directors must take winding-up proceedings seriously, as failure to act promptly can result in the sale of company assets and the distribution of proceeds to creditors.

What Happens When a Company Fails to Defend a Winding-Up Petition?

If a company is unable to defend a winding-up petition, the following can occur:

• Asset Sale: A liquidator will sell the company’s assets to repay creditors.
• Settling Legal Disputes: Any ongoing legal issues may be resolved.
• Debt Recovery: The liquidator will collect debts owed to the company.
• Funds Distribution: The liquidator will distribute the recovered funds to creditors, starting with the petitioning creditor (such as HMRC).

How Can a Company Defend a Winding-Up Petition?

Companies can defend a winding-up petition by employing several strategies:

1. Pay the Debt in Full

Making a full payment to HMRC or any other creditor may stop the petition from being advertised, although this is not guaranteed. Immediate legal advice is essential in such cases.

2. Dispute the Debt

If there is a genuine dispute about the debt (e.g., the amount owed or whether the debt is valid), the company can present evidence to the Court to challenge the petition. Legal counsel will guide you through the process of presenting a strong case.

3. Company Voluntary Arrangement (CVA)

A CVA is a legally binding agreement between the company and creditors, allowing for repayment over time. Entering into a CVA can prevent the winding-up petition from progressing. We can assist you in assessing whether a CVA is a suitable option for your business.

4. Negotiate with Creditors

Negotiating directly with creditors may lead to an agreement to delay or cancel the petition. Demonstrating your ability to repay the debt can often result in a mutually beneficial resolution.

5. Consider Administration or Voluntary Liquidation

If the business is in financial distress, administration may help rescue the company. Alternatively, voluntary liquidation might be a way to address the situation without the risk of a winding-up order.

6. Request an Adjournment

In certain cases, a company can request an adjournment to delay the winding-up hearing, providing additional time to reach a resolution. Our team of legal experts can help secure adjournments and explore alternative solutions.

Expert London Winding up Petition Lawyers

At LEXLAW, we specialise in tax disputes, winding-up petitions, and civil litigation. If you or your business are facing issues similar to those encountered by the Bank of London—whether it’s dealing with HMRC petitions, tax litigation against HMRC, or negotiation on your behalf—our experienced team is here to guide you through the complexities. We offer tailored advice to help protect your business and ensure compliance with legal requirements.

Expert Legal Representation in HMRC Petition Defence

If your company is facing a winding-up petition or similar legal challenges, our experienced solicitor and barrister legal team is here to assist. We offer comprehensive services for both issuing and defending winding-up petitions, ensuring that your interests are protected throughout the legal process. Whether you’re dealing with tax disputes, financial difficulties, or other corporate challenges, our elite lawyers can strategically guide legal proceedings. We specialise in litigation, providing tailored solutions to meet client need.