Rescuing a Longstanding FCA-Regulated Company from Court-Ordered Liquidation
07.04.2025
Background
Our client, a well-established financial services firm authorised and regulated by the Financial Conduct Authority (FCA), recently encountered a significant legal challenge. A single unpaid invoice— left unresolved due to the director’s sudden and serious illness—triggered a winding-up petition brought by a creditor.
Despite the company’s historically strong compliance record and sound financial position, the High Court granted a winding-up order in the director’s absence. This resulted in the company being placed into compulsory liquidation. The consequences were immediate and severe: the company’s accounts were frozen, its operations were suspended, and its regulatory standing with the FCA was put at serious risk.
This situation arose not out of commercial misconduct or insolvency, but from the director’s inability to act due to medical incapacity at a critical moment.
The Legal Challenge
Under Rule 12.56(3) of the Insolvency Rules 2016, a company has only five business days to apply to the court to rescind a winding-up order. This deadline is treated as strict, and missing it typically bars a company from seeking relief.
In this case, the director’s condition rendered him unable to respond within the prescribed period. The company missed the five-day window, and was therefore technically out of time to challenge the order — placing it in an extremely vulnerable legal position. Our
Approach and Solution
Recognising that exceptional circumstances called for a strategic and urgent legal intervention, we promptly filed an out-of-time application to the High Court of Justice for the rescission of the winding- up order.
Our argument was grounded in Section 375(1) of the Insolvency Act 1686, which gives the court discretion to rescind a winding-up order where there is a sufficient cause to justify doing so, even outside the ordinary time limits.
We submitted comprehensive written evidence and legal submissions, including:
- Medical documentation confirming the director’s incapacity to act within the required timeframe;
- Witness Statement of the Director of the Company;
- Financial statements demonstrating the company’s general solvency and long-standing regulatory compliance;
- A viable repayment plan;
- A detailed assessment of the disproportionate impact that liquidation would have on the business, including its clients, staff, and regulatory position;
- Legal argument emphasising the exceptional and compassionate grounds upon which the court could exercise its discretion.
We also cited relevant case law supporting the court’s ability to set aside a winding-up order where fairness and justice demand it, even when the statutory deadline has passed.
What’s Next
The High Court has accepted our client’s application and scheduled a substantive hearing for 5 April 2025. The court will now consider whether the director’s health condition and the surrounding circumstances warrant the rescission of the winding-up order outside the usual statutory timeframe.
This matter is of considerable importance not only to our client but also to other directors and businesses who may find themselves in similar positions due to unforeseen health or personal emergencies.
Why It Matters
This case highlights the importance of specialist legal intervention in insolvency proceedings — especially where procedural time limits intersect with human realities such as illness or incapacity.
It also illustrates our firm’s ability to act swiftly, apply legal discretion, and present robust, evidence- based arguments in high-stakes commercial litigation. At its core, this case underscores a key principle of our practice: the law should serve justice, not merely procedure.
