Jul 2012
BERMUDA
SUPREME COURT
COMPANIES – WINDING UP PETITION – INSOLVENCY-NON-ASSIGNMENT CLAUSE – COLLATERAL PURPOSE
This case concerned the winding up petition of the named Company, which was sought by one of its creditors (Maxim). In March of this year the Supreme Court had held that Maxim had standing to petition. The Company argued that Maxim’s proceedings were “tainted by improper motives”. Further, much of the Company’s argument was dependent upon the fact that the other creditors supported their motion; that the application for winding up should be refused. The Petitioner sought a winding up order on the basis that the Company is insolvent on a cash-flow and balance-sheet basis and that as an unpaid creditor is entitled to a winding up order as of right.
It was held that the Petitioner was entitled to an order that the Company be wound up, but solely on the basis that the Company was unable to pay Maxim’s debt, which was due and payable and it gave the Company time to secure the petition debt.