Helping a Key Worker Company Continue to Trade Through the Coronavirus Pandemic – The Events of 30th March 2020

Here at NDP we are committed to being proactive in everything we do. This is highlighted in a very recent success in the High Court, when one of our insolvency solicitors defended a key worker company (designated as such as a result of the Coronavirus crisis) faced with a Winding-Up Petition.

This case study gives the details of how we worked quickly with Counsel to expedite the final hearing of the petition and then persuaded the Court to dismiss it, allowing the company to continue its important work. It is a good example of our solicitors working well with HMRC and the Courts to get the best possible result for all parties during these difficult times.

Background to this Winding Up Petition Case

Our client company deals with the delivery of key materials, needed to help the fight against the Coronavirus Pandemic, and had been designated a key worker company in the category of ‘producers and distributors of medicine and equipment.’ However, our client was faced with a Winding-Up Petition (‘the Petition’) from HM Revenue and Customs (‘HMRC’), which if approved by the Court would have led to compulsory liquidation.

We quickly obtained an adjournment of the Winding-up Petition hearing for our client, after which our Insolvency Solicitor, Kunal Bhalla, and Counsel Aidan Reay successfully made an urgent Application to the High Court to expedite the final hearing of the Petition. This happened within three days of the adjourned hearing and was scheduled for 30th March. Not bad, even if we do say so ourselves, as time was not on our side in this case.

The Events of 30th March 2020 – The Winding-up Petition is Dismissed

This was not however the end of matters. Kunal and Counsel then persuaded the Court during a Skype hearing, to dismiss the Petition on (amongst other grounds) the basis that our client company carries out key worker functions within the Pandemic, as the following key extracts from the High Court Order, dated 30th March show:

  • ‘And upon hearing Aidan Reay, Counsel for the company, remotely by Skype by reason of the Pandemic…’
  • ‘And upon the Court recognising that…the company carries out key worker functions within the Pandemic….’

The Court (taking a very pragmatic approach) agreed that the essential services of our client needed to continue, and that the unfreezing of the bank accounts to pay key workers was essential. HMRC also deserve great credit here for the speed of their response for the hearing.

What the Outcome Means to our Client

Our client company can now go on and continue its vital work in delivering essential resources during the Pandemic to other businesses up and down the Country. This outcome is just one small example of the right decisions being made in view of the needs of the moment.

We suspect that many other businesses may need to follow the path set out by Kunal and the ever-excellent Aidan Reay of Kings Chambers. Together they found a way forward for our client.

If you or your business are facing insolvency related difficulties in the current climate, then please contact a member of the NDP Team who will be happy to discuss matters with you. There are key legal issues around insolvency, including the statutory requirement to continue to fulfil the duties of directors, that will continue to arise regardless of Coronavirus, and that means expert and pragmatic legal advice is needed.

In the meantime, to everyone reading this article, please stay safe and stay well.