The High Court of Justice, in East Riding Yorkshire v GB Strategic Land Fund has recently clarified that the viability of winding up a sub-fund is a substantive issue to be addressed at trial, not a ground for refusing jurisdictional service of a winding up petition outside the United Kingdom.
A winding-up petition is a formal request to the court, urging the compulsory liquidation of a company due to its insolvency. This process can be initiated by creditors who are owed a substantial sum by the company. A petitioner must serve a winding-up petition upon the debtor, according to paragraph 2 of Schedule 4 to the Insolvency Rules 2016 (rule 7.9(1)).
Instructing a Specialist Winding-up Petition Lawyer
Understanding insolvency rules and laws can be complex, especially for those who aren’t experts. Winding up a company, and dealing with insolvency in general, is a specialised area of law. Most regular solicitors don’t have much experience with the UK Insolvency Rules.
It’s important to realise that making mistakes with a winding-up petition, such as here with service, can have serious consequences. That’s why it’s crucial to get advice from a lawyer who knows insolvency law well.
Where Do I Serve a Winding-up Petition?
The Petitioner must serve the winding up petition at the company’s registered office to someone who:
- Admits to being a director, another important officer, or an employee of the debtor company when you give them the petition.
- Is, to the best of your knowledge, a director, another key officer, or an employee of the debtor company.
- Agrees to accept the petition on behalf of the debtor company and acknowledges having the authority to receive official documents.
However, if the company that owes you a debt operates internationally or has assets abroad, serving a winding-up petition becomes a nuanced challenge for the petitioner. Fortunately, the UK legal system recognises the need to allow for service of judicial documents outside its borders, but certain procedures must be followed.
Can I Serve a Winding-up Petition Outside UK without the Court’s Permission?
No. The case of East Riding of Yorkshire Council v GB Strategic Land Fund  EWHC 2884 (Ch) involved an umbrella fund company in Luxembourg (C), consisting of various sub-funds with distinct sets of assets and liabilities. One sub-fund, K, had investors who sought permission to serve a winding-up petition beyond the jurisdiction under section 221 of the Insolvency Act 1986.
Initially, the High Court denied permission, citing the lack of grounds for winding up and asserting that K was not an unregistered company under section 220. The investors appealed, and the court, recognising an error in the application of the test, granted the appeal. Allowing permission, the Court clarified that the correct test involved determining a good arguable case for service outside the jurisdiction, not assessing the merits of the petition.
Test for Granting Permission For Service of a Winding-up Petition Outside the UK
To serve a winding-up petition outside the UK, you generally need the court’s permission according to CPR Part 6B. This is obtained through an application to the court, seeking leave to serve the petition in the relevant foreign jurisdiction. The court will consider factors such as the location of assets, the company’s connections to that jurisdiction, and the practicality of serving the documents there.
The requirements to be satisfied for granting permission to serve outside of the Jurisdiction of the UK courts was settled by the Supreme Court of the UK in VTB Capital plc (Appellant) v Nutritek International Corp and others (Respondents)  UKSC 5. The apex court held that following requirements must be satisfied:
- There is a serious issue to be tried on the merits of the claim.
- A good arguable case that the claim against the foreign defendant falls within one or more of the classes of case for which leave to serve out of the jurisdiction may be given. These are now set out in paragraph 3.1 of Practice Direction 6B. Now, having a good arguable case doesn’t necessarily mean the applicant must have a “much better argument.” Instead, it suggests that the applicant has a stronger argument compared to the respondent.- Brownlie v Four Seasons Holdings Inc  UKSC 80, paragraph 7.
- if a court is not satisfied that England is clearly the appropriate forum in which to bring a claim, then permission to serve out must be refused or set aside
In addition to legal complexities, practical considerations play a vital role. Translating documents into the local language, understanding local rules and customs, and complying with specific procedures of the foreign jurisdiction are essential aspects of the process. At Lexlaw, our experienced Legal professionals specalise in international insolvency matters and can guide you through the intricacies of the process, ensuring compliance with both UK law and the laws of the foreign jurisdiction.
The Court has Granted Permission to Serve a Winding Up Petition Outside the UK, What Do I Do Now?
Post-Brexit, since 1 January 2021, the Hague Convention of 15 November 1965 on the service abroad of judicial and extrajudicial documents in civil and commercial matters is applicable between the UK and those EU member states which are part of the convention. The UK acceded to the convention in 1967. All 27 EU member states are signatories. The convention is widely applied: the total number of contracting parties is 78. See the full list of parties to the convention.
The convention governs many aspects of the service procedure. Besides the methods outlined in the convention, it allows other ways of service as long as they’re approved by the receiving state’s internal laws (Article 19). State parties to the convention can’t oppose a method of service if it meets the convention’s conditions, unless the state sees adherence to it as a threat to its sovereignty or security (Article 13).
Once you have permission for service of a winding up petition outside the UK, you can use the form below to request service. The convention is applicable to all civil and commercial cases and provides for three basic methods of service (Articles 1 and 6 to 10).
Download Model Form ‘Request for Service Abroad’ under the 1965 Hague Convention
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When responding to a winding-up petition, it is crucial to consult with a qualified professional solicitor. We provide guidance tailored to your company’s specific situation and help directors make informed decisions. If needed, we can guide you to trusted insolvency practitioners or other professionals. This guide only provides general information and cannot be relied upon as legal advice. Insolvency laws and rules vary, as do the facts of every case, so you must seek professional advice specific to your company’s circumstances.
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