The High Court has substituted Cronosell Telecom Limited as petitioner in a winding-up case against Lycatel (Ireland) Limited, ruling that substitution may be allowed even when the original petition was not advertised.
Wavecrest (U.K.) Limited presented the petition on 6 April 2009, alleging that Lycatel was insolvent and unable to pay its debts. Wavecrest had served a statutory demand for £255,238.30, which it said had not been met. At a hearing on 27 April, Wavecrest said the petition had not been advertised and sought to withdraw it. Cronosell then asked to take over the petition. The judge adjourned the matter so Cronosell could provide evidence of its right to petition.
Cronosell relied on an affidavit from Ihor V. Bodyak, sworn in Ukraine on 9 May. He said Lycatel owed Cronosell US$94,161.64 for telecommunications services provided between 1 January 2008 and 28 February 2009, and that a statutory demand served on 3 April had not been met. The judge found Cronosell was a creditor entitled to present a petition and could rely on the statutory deemed-insolvency provision.
Wavecrest opposed substitution, arguing that Order 74, rule 18 depended on the petition having been advertised. Justice Laffoy rejected that interpretation. She said the rule’s substitution power could apply in each of the circumstances it describes, whether or not the petition had been advertised. The rule is intended to prevent a company from avoiding winding-up proceedings by settling with petitioning creditors one at a time, while leaving other creditors to start again.
The judge said Cronosell had standing to apply and granted the application. She also considered it proper to hear the application despite her understanding that Cronosell had not given Wavecrest notice under rule 15.
The court did not decide whether Wavecrest, whose claim was understood to have been compromised after the petition was presented, had standing to oppose substitution or whether any settlement could be avoided under section 218. Justice Laffoy said that issue had not been argued and was for another day. No winding-up order was made in this judgment.
The order requires the petition to be amended to identify Cronosell and its solicitors, state its grounds and identify the jurisdiction as the centre of main interest. The amended petition must be verified and served on Lycatel, and advertised under rule 10 before the adjourned hearing.