The date that a winding up petition is presented has consequences – consequences for the company subject to the petition, its directors, the petitioning creditor and it is also important in the context of a subsequent liquidation where the date is relevant to claims which a liquidator can bring.

Although seemingly a simple question, the Court of Appeal was asked to determine the date of presentation of a winding up petition when, in today’s world, petitions are now filed at court electronically using ce-file (Re A Company (CR-2024-BHM-000012 [2024] EWCA Civ 1436).

Prior to ce-filing a winding up petition would be delivered to court (often by hand) with a cheque for payment of the court fee and one for payment of the official receiver’s deposit. However, with the introduction of ce-filing which allows for filings to be made electronically 24/7 (including winding up petitions) Lord Snowden was required to do a little “legal archaeology” to answer the question: “in an era of electronic working, when is a winding up petition presented?”

The answer is important in several respects:

For a Company once a petition is presented it becomes public knowledge. This is likely to have adverse consequences – suppliers stop supplying, a company’s bank is likely to freeze its accounts and from the date of presentation s127 of the Insolvency Act 1986 (IA 1986) kicks in (so potentially making transactions void or voidable), all of which impact business as usual. 

For Insolvency Practitioners the date of presentation of a petition is key to determining which transactions can be challenged under s127 IA 1986, and whether a transaction occurred at the “relevant time” for the purposes of being able to challenge as a transaction at a undervalue or preference

For Directors where the company might be in the throes of appointing an administrator, a winding up petition presented before a notice of appointment is filed means that the company or its directors can no longer appoint an administrator “out of court”[1]. Instead, they will have to resort to making an application to court or ask the company’s debenture holder (if there is one) to appoint – adding cost and time delay to the process.

For the Petitioning Creditor knowing that a petition is presented is likely to mean that the creditor is in a stronger position to negotiate payment of the petition debt and gives comfort that the value of the company is protected (in the sense that s127 and the anti-avoidance provisions in the insolvency legislation will apply if the company is ultimately wound up).

Lord Snowden’s conclusion, which the other justices in the Court of Appeal agreed with, was: a winding up petition is “presented” when a petition has been delivered to court for filing AND the official receiver’s deposit has been paid.

Has technology just made things more complicated?

Winding up petitions are different to most court filings because they require two payments – the court fee and the official receiver’s deposit. Court fees can be paid through the ce-file system, but the OR’s deposit cannot. This can only be paid by cheque, or (as is more usually the case) over the telephone by card payment. 

Broadly, when a document is ce-filed it is the payment of the court fee that is decisive in determining when a document is filed or issued. But the need to pay the OR’s deposit, and the fact that this is a separate act which can occur shortly after a petition is submitted (by making payment over the telephone), or perhaps a week later if a cheque is posted to the court, caused some of the timing difficulties which the Court of Appeal had to unpick in this case.

It is not uncommon for language from practice directions and legislation to be used interchangeable by the court, judges and court users when describing litigation processes. Words such as deliver, lodge, submit, accept, file, issue and present can all mean different things but, as they did in this case, the date that a petition is “presented” has consequences and is important.

Here the company that was subject to the winding up petition had made an application to injunct the petitioning creditor from presenting it. That application was dealt with in the Birmingham court which had also made two orders, but without knowledge of any of that, the petitioning creditor issued a winding up petition in the Manchester court. Coupled with the application being posted, the OR’s deposit being paid by cheque and variations in language used to describe what had been done – issued, presented and accepted – the consequences of the foregoing were a bit of a mess to unravel.

What added to the confusion in this case was the petitioner had used the template winding up petition published by the Government which refers to the date on which the petition was issued.[2]

In concluding that the petition was presented when the petition had been delivered[3] and the OR’s deposit has been paid Lord Snowden applied an “updating construction” to the expression “presentation” of a winding up petition to “allow for changes in court procedure and technological developments”

Given that as practitioners we often have to grapple with the insolvency legislation not necessarily aligning with changes in court procedure and technology, applying an “updating construction” to the Rules is helpful.

For example, we have seen recently discussion on the question of how many copies of a notice of appointment need to be filed at court (see our blog), the Rules say three copies which made sense when documents were physically taken to court – less so now when they are filed electronically. Would an updating construction have helped in this case?

Further we saw last year the practice direction on out of hours appointments by qualifying floating charge holders that helped address the fact that documents are no longer handed over at the court desk and can be filed electronically – see our blog.

Applying an “updating construction” to the insolvency legislation is sensible and helpful – although maybe now is a good time to tidy up the Rules to reflect changes in practice, and technology?

Is time equally important?

The exact time a petition is presented is relevant in the context of out of court administration appoints at least. As noted above, if a petition is presented before a notice of appointment, then this can put a spanner in the works when it comes to the appointment process.

A petition presented at 10.08 would prevent the directors/company appointing administrators out of court at 10.09 – para 25 of Sch B1 would apply.

It is unlikely that filings made where there are minutes between them will be picked up by the filer/court staff – and where there are seemingly two sets of insolvency proceedings this creates a problem that will have to be resolved. Although you might think this is unlikely to happen in practice, it is a real consideration in the race to appoint administrators when there is a threat of a winding up petition.

In our experience, when speaking to the court staff to find out the time a winding-up petition has been presented, they have not been able to tell us the time of presentation.

The Insolvency Practice Direction talks about the date of presentation of a petition but does not talk about the time of presentation. It also says in CPR Practice Direction 510 that the court should keep a record of when payment was made, but it is not immediately obvious whether this means they should record the exact time of payment. Lord Snowden does seem to align payment of the payment of a deposit with PD510 para 5.4(2) which references time and date to payment – but the position is far from clear.

If only this point had been addressed in the judgment given that timing can sometimes be everything – but this was not an issue which the Court of Appeal had to address.

[1] Unless the petition is presented in between the filing of a notice of intention and notice of appointment, then an out of court appointment can take place. But again, the date of presentation is relevant.

[2] Prior to the 2016 Rules a winding up petition had to be in a prescribed form which required the court to endorse the petition with the date on which it was presented. There is no such requirement under the 2016 Insolvency Rules which simply requires the petition to contain a blank box for the court to complete with details of the venue for hearing the petition. It was unclear in this case why the template form published by the Government has a box that requires the court to include the date of issue – Lord Snowden suggests that the template should be amended. 

[3] Meaning delivered to the court for filing