On 22 January 2014 the High Court ordered the winding up of a property company, Fuerta Limited, on the unusual ground that it was just and equitable to do so. Resort to this ground for winding up is usually reserved for the most intractable of situations and it is thought to be the first time the Court has done so on foot of a creditor petition.
The company held a majority stake in a tax co-ownership structure established for the investment and development of the Marlay Nursing Home. Bank of Scotland plc. financed the development and had security over the co-ownership’s interest in the nursing Home.
The operator of the nursing home wished to acquire the company’s interest in the co-ownership and the benefit of the company’s tax allowances under the tax structure. The transaction was supported by the Bank. However the transaction could not be completed without the cooperation of the company which had become dormant and which was pending strike off from the companies register for a second time. The situation was further complicated by the existence of an impending tax deadline which would extinguish the prospect of completing the transaction if expired.
It appears that the Bank was not in a position to enforce its security as there was no event of default. Accordingly the Bank sought the appointment of the liquidator on just and equitable grounds in order to protect the value of its secured asset by completing the disposal of the company’s interests in the co-ownership (once the liquidator was satisfied that it was in order to do so).
In circumstances where there was no obvious alternative to restore the situation and, based on the specific facts before it, the Court held that it was just and equitable to make the order to wind up the company.
William Fry act for the Official Liquidator of Fuerta Limited, Mr Brian McEnery of BDO.
Contributed by Craig Sowman.
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