Whenever there is an apparent monetary debt, common practice is for a claimant to threaten a winding up petition as part of the tactics to get a potential defendant to pay up. Three weeks after a statutory demand letter is sent where an apparent debt for £750 or more exists, a winding up petition can be issued against a company which has not paid (the actual financial wellbeing of the payer is irrelevant as long as they have not paid). Whenever an apparent debt is in dispute this can be a powerful tool to unsettle a defendant.

The context - validity of appointment of administrators

The appointment of administrators under a charge prevents a company’s directors from exercising any management powers without the administrator’s consent.
However, the charge must be enforceable at the time of the administrators’ appointment. What happens if the directors dispute that the charge was enforceable? Are they prevented from controlling the company to reject the appointment.

The background