Once a winding-up petition has been served, it can be advertised in the London Gazette seven business days thereafter. Advertisement of a winding up petition is often viewed as being catastrophic for the debtor company as the advertisement will notify the company’s bank (generally leading to the immediate freezing of the company’s bank account), as well as its other creditors that the petition has been presented. Therefore, the advertising of the petition itself can do substantial damage to the commercial reputation of the company.

Since the decision of Re Signland [1982], it has been the court’s usual practice to dismiss a petition where the provisions relating to advertisement of the petition are not complied with. In particular, where the advertisement is made prematurely. This is on the basis that the company is entitled to the benefit of the seven- day period stipulated in the Insolvency Rules 1986 in order to consider its position.

If the creditor attempts to publicise the petition by alternative means, for example, by informing the company’s bank directly, the courts have held this amounts to an abuse of the process of the court by placing unfair pressure on the company (Re Bill Hennessey Associates Limited [1992]).

However, in the recent case of Re a Company (2012) (unreported) the creditor’s solicitors sent a copy of the petition to the company’s bank prior to service of the petition. The company argued that this was, as above, an abuse of process. However, the court held that it was not an abuse of process as it determined that the creditor’s solicitors had merely been over enthusiastic in seeking to protect the creditor’s interests.

This is certainly an interesting decision in light of the relevant case law and it is not clear whether the court would have arrived at an alternative decision if the company’s cross claim against the creditor had had any reasonable prospect of success. In this case, the court was not satisfied that the company’s cross claim had a reasonable prospect of success and therefore the creditor had standing to bring the petition.

Creditors would be ill advised to rely on this judgment and seek to prematurely inform the company’s creditors of a petition.  However, given that certain credit reference agencies and other third party search providers now confirm the existence of a winding up petition, even if it is not yet advertised, it is conceivable that a company may, by the time that the seven day period has expired,  find that many of its creditors, including its bank, are already aware of the petition by these indirect means. Thereby eroding any protection afforded to it by the relevant advertisement restrictions.

Even so, it seems hard to believe that the only process in which the constitution of the committee is not required to be reported to the Registrar of Companies is compulsory liquidation, when the company has not first been through administration. On an administrators’ petition for winding up, the certificate of due constitution is required to be filed once the liquidation has started and a committee has been formed by the administration’s creditors committee agreeing to continue (IR 4.176(6)). If there is a committee in administration, the certificate is also filed (IR 2.51(2)). Filing is also expressly required for CVLs (IR 4.153(6-CVL)). However, the position in a compulsory liquidation following a creditor’s petition is not addressed and indeed, recent experience confirms that Companies House will reject any attempt to file the certificate. I suspect the letters “CVL” have been added to the text of the last mentioned Rule in error.

It is something of a mystery as to what steps the liquidator must take to meet his obligation to ‘issue’ the certificate, as required by IR4.153(1) when it is not required to be filed.  As a minimum, it would seem sensible to circulate it to all the committee members.

It seems this practice is no longer acceptable – no matter how urgent the case.

Possibly this will result in more out of hours filings on a “hostile” basis.