Re Consumer and Industrial Press Ltd, 1988 BCLC 177

Citation:Re Consumer and Industrial Press Ltd, 1988 BCLC 177

Rule of thumb:When an organisation has not paid their debt, how can you successfully lodge an action to put them into administration? The creditor has to have an accountant’s report proving that there is a 50% chance of success; the debtor has to provide an accountant’s report proving that there is a 51% chance it is not required & it is a temporary cash flow problem.

Judgment:

The Court confirmed the basic test for when it should begin to be considered whether a company should be allowed to enter administration and when a company should just be liquidated without incurring the expense of going into administration to try to keep the business alive. The Court held that the first stage for any argument to potentially be successful in stopping an administration and ensuring the case proceeds straight to a liquidation is state that the company has a less than 50% chance of success – the first stage of prima facie raising the possibility that an administration will not go ahead and a company will proceed straight to liquidation, ‘That does not mean that it is merely possible that such purpose will be achieved; the evidence must go further than that to enable the Court that the purpose in question will more probably than not be achieved’, Gibson J at age 178

Warning: This is not professional legal advice. This is not professional legal education advice. Please obtain professional guidance before embarking on any legal course of action. This is just an interpretation of a Judgment by persons of legal insight & varying levels of legal specialism, experience & expertise. Please read the Judgment yourself and form your own interpretation of it with professional assistance.