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(Chancery Division, His Honour Judge
The petitioner presented a winding-up petition against the debtor company on the basis of unpaid invoices. In advance of the hearing, the debtor filed a witness statement in which it admitted that it was unable to pay its debts as they fell due but disputed that it was indebted to the petitioner. The exhibit to that statement included draft CVA proposals in which the petitioner was listed as a contingent creditor in the sum of £1. At the hearing, the debtor sought an adjournment of the petition to a longer
hearing to determine whether there was a genuine dispute on substantial grounds. However, the deputy district judge made a winding-up order on the basis that the petitioner was a contingent creditor and the company was admittedly insolvent.
On appeal, His Honour Judge Hodge QC (sitting as a judge of the High Court) held that the deputy district judge had fallen into error and, in any event, should have exercised his discretion not to make a winding-up order on the basis of a £1 debt. Accordingly, he set aside the winding-up order. However, he declined to dismiss the petition since the debtor had only sought an adjournment at the original hearing.
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