Duneau v Klimt Invest SA And Others ' Just And Equitable Winding Up Petition

• Jurisdiction: United States,Federal
• Law Firm: Blaser Mills
• Subject Matter: Corporate/Commercial Law, Corporate and Company Law, Shareholders
• Author: Mr Edward Bible
• Published date: 29 March 2023

The High Court has held that it was just and equitable for a public company registered in England and Wales and listed on a French stock exchange to be wound up by the court. (Duneau v Klimt Invest SA and others [2022] EWHC 596 (Ch)).

The Facts

Klimvest Plc was the last in a number of IT companies which had been owned by Michel Balcaen and Eric Duneau. Klimvest was incorporated in April 2002 and had been converted to a public limited company in July 2006. In October 2006 Klimvst was listed on the Alternext exchange in Paris. At the time of the winding up petition, Mr Balcaen was the chairman of Klimvest and the majority shareholder via Klimt Invest SA whilst Mr Duneau was a director and minority shareholder. The company had developed its IT business and had purchased a number of IT companies. In January 2019 Klimvest's business and assets were purchased by P1C for '8.25 million. The shareholders had not been able to agree what to do with the cash held by Klimvest. Mr Balcaen and his supporters wanted to use it to invest in various businesses. However, Mr Duneau and his supporters wanted the cash to be distributed and Klimvest wound up. Mr Duneau presented the winding up petition on 14 October 2020. Klimt Invest opposed the petition and asserted that the purpose or substratum of the company had not come to an end and the company was now a holding company. At the subsequent AGM in May 2021, Mr Duneau was removed as a director.

Just and equitable winding up

The Court considered the remedy of a just and equitable winding up. It noted that the starting point is section 121(1)(g) of the Insolvency Act 1986 which provides that a company may be wound up by the court if "it is just and equitable that the company should be wound up" and

Section 125 Insolvency Act which makes it clear that if another remedy is available and the petitioner is acting unreasonably in not pursuing that other remedy, then the court does not have to make an order to wind up a company on just and equitable grounds. Where there is a dispute between shareholders, then a petition under section 994 Companies Act 2006 on the grounds of unfair prejudice may be more appropriate.

The judge noted that in Lau v Chu [2020] UKPC 24, the Privy Council held that the legal burden of proof was on the applicant to establish his or her entitlement to relief. If the applicant established his entitlement to relief, then a winding up would be just and equitable if there were no other remedies available. If...