Cornhill Insurance plc v Improvement Services Ltd: 1986

Held: Where a company was under an undisputed obligation to pay a specific sum and failed to do so, it could be inferred that it was unable to do so; that accordingly, the defendants could properly swear to their belief in the plaintiff company’s insolvency and present a petition for its winding up.
Harman J said: ‘That appears to me to be sound reason and sound law. I re-enforce it by reference to a decision in Re a Company 1950 (94) SOL J 369 Visey J in the matter in which counsel of the utmost distinction in Chancery at that time both leading and junior counsel appeared said that where a Company was well known and wealthy it was the more likely the delay in settlement of its obligation would create suspicion of its financial embarrassment.’ ‘Rich man and rich companies which did not pay their debts had only themselves to blame if it were thought that they could not pay them.’


Harman J


[1986] 1 WLR 1, [1986] BCLC 26


CitedMann v Goldstein ChD 1968
Ungoed-Thomas J said: ‘When the creditor’s debt is clearly established it seems to me to follow that this court would not, in general at any rate, interfere even through the company would appear to be solvent, for the creditor would as such be . .

Cited by:

CitedBNY Corporate Trustee Services Ltd and Others v Neuberger SC 9-May-2013
Potential Insolvency effect under guarantee
The various parties had entered into complex and substantial financial arrangements incorporating guarantees. The guarantees were conditional upon the guaranteed party being solvent. The parties disputed whether a party which would otherwise be . .
Lists of cited by and citing cases may be incomplete.

Company, Insolvency

Updated: 18 May 2022; Ref: scu.535113