Jurisdiction(s):
United Kingdom

Winding-up petitions: court may order liquidation despite disputed debts and cross-claims; evidence scrutiny and deadlock insolvency decisive (Khera v Palladian Capital, England and Wales)

Published on: 15 May 2024

Published by a LexisNexis Restructuring & Insolvency expert

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Article summary

Khera v Palladian Capital Ltd and another [2024] EWHC 1009 (Ch) What are the practical implications of this case?

Conventional wisdom holds that winding-up petitions founded on disputed debts, or where the debtor has a viable cross claim, ought not to be pursued and should be refused. The bar to show such disputes or cross claims is low and, when petitions are dismissed or injuncted to prevent their continuation, indemnity costs are frequently imposed on petitioners. Consequently, parties are understandably reluctant to issue winding-up petitions when they anticipate a response raising a dispute or a cross claim. This judgment, however, offers a timely reminder of two points:

first, notwithstanding the modest merits threshold, the court can—and should—examine the underlying papers with rigour, much like a summary judgment exercise. A bare assertion of dispute or cross claim should not, by itself, defeat a petition, particularly where that assertion is inconsistent with contemporaneous materials
secondly, in exceptional circumstances, a court is entitled to conclude that liquidation is the

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