High Court refuses winding up of company due to secured assets and ability to pay debts as they fall due.

An Árd Chúirt

The High Court

High Court (sitting in Cork City) record number: 2025 191 COS [2026] IEHC 140

In the Matter of Charles Kelly Limited

and

In the Matter of section 569 of the Companies Act 2014

Judgment of Mr Justice Peter Charleton delivered on Friday 6 March 2026

1. On 6 August 2024 a judgment in default of appearance was marked against the company, Charles Kelly Limited, in the Central Office of the High Court, in the sum of €983,714.50 and costs of €521.00, in favour of Peter Boyle and Melanie Boyle, a firm of solicitors practicing under the style of Charles BW Boyle & Son. Those proceedings were in debt collection, in case number 2023/183/S High Court, for the recovery of legal fees. These were claimed on foot of work carried out by the solicitors for the company between 11 April 2018 and 7 April 2022, some in litigation against Ulster Bank and in respect of which there exists at least one successful order of costs in favour of the company. This was not recovered against Ulster Bank because the company neglected to either give written instructions to the solicitors or to sign a bill of costs; this despite pleading. For reasons probably due to the illness of the principal of the company, this was ignored. So was the imminent marking of judgment, despite consent to late filing of an appearance given in writing to the company. The sum due has now grown to €1,000,738.40 because of interest. The fees due had previously been notified to the company. This was also ignored. No remedy under the Legal Services Regulation Act 2015 was sought by the company. Hence, the costs in an enormous sum were neither taxed nor agreed. Again, this is due to the default of the company’s director. The solicitors are stretched by the blockage in fees.

The present application

2. Section 569 of the Companies Act 2014 is invoked by the solicitors. They say that the company should be wound up. They have a debt. In the words of the statute, they assert “the company is unable to pay its debts”. Furthermore, moving to s 570, there has been a statutory demand, and that is proven, for a sum in excess of €10,000 and “21 days after the service of that demand” the company has “neglected to pay the sum or to secure or compound it to the reasonable satisfaction of the creditor.” Hence, the issue here is should the company be wound up as insolvent or because of the debt for the substantial legal fees that have not been assessed, either under the 2015 Act or at all.

3. The company, by affidavit, says that the bill is excessive, should never have been marked in the office, should now be sent to adjudication, and that they will in consequence seek to overturn the judgment and put the charges on what they claim to be a more reasonable footing. Much of that sum may have been recoverable from the opposing party in the litigation referred to but was not due to the default referenced.

Background

4. As gleaned from a day-long hearing, the situation of the company is one of dysfunction in the aftermath of an internal dispute and of the illness of the principal. Nonetheless, the company is, at least on the face of it, asset rich. More importantly, it is a going concern. For over a century, a firm of builders’ providers in the name of Kelly carried on business in Letterkenny, County Donegal, with ancillary services; that later became the company as and from the mid-20th century. There are 23 employees. An accountancy report from Patrick McDermott and Company gives some detail of the trading and underlying position. Over the three years 2023-2021 there is an operating deficit growing from €2.4 million to €2.5 million to €2.9 million, using round figures. That deficit is largely accounted for by a debt claimed by an assignee of Ulster Bank in the sum of about €2.1 million. There, the company take the attitude of disputing entitlement of the assignee to recover, not on the basis that the money was not borrowed, but that the last acknowledgment of the debt was over six years previous to any claim. This proposed defence may be real or illusory; it cannot now be said.

5. Parts of Donegal were hit by a building materials scandal resulting in the ruination of many homes of Donegal but now there is a government scheme offering a gratuity to homeowners. There is likely to be very good business in supply and the company is well-placed. Then, there are two compulsory purchase sets of funds due. Both arise from roadworks needing company lands and the notice to treat was served before the economic crash from 2008 on. Hence, it is claimed that in excess of €1.5 million is due. The company asserts that about €800,000 is now due. That, however, is subject to a land dispute, has been litigated, and may net perhaps 50% of that sum. As to another large sum due, there is a title issue on the land parcel and that has not yet been resolved and until it is in this glacial process, that money will just remain tied up.

6. The Court asked if the money, perhaps €400,000, released it happened on the same day as this hearing, 2 March 2026, would be applied to the debt to the solicitors. No assurance was received. The plan of the company is to overturn the judgment by default and contest the bill and no monies will be paid on account or put in escrow pending outcome. A personal sense of grievance emerges towards the solicitors and dogs any rational compromise or resolution: but more significant is an approach of ignoring the edge of the cliff that this application to wind up the company represents.

7. The solicitors have been forceful in securing the marked judgment. The main trading premises of the company is said, by the accountants, to be very valuable; perhaps €7 million but that is not a professional valuation, and is unsubstantiated by comparators. In a ‘fire sale’ situation, such as on liquidation, recovery is likely to be a fraction. In addition to the business premises, the company holds a number of non-trading assets in the form of lands or premises. Vagueness characterises even the submissions on this; but there are perhaps four of these, which are because of their simpler character more readily saleable. Judgment mortgages have been put on these by the solicitors. Hence, these are encumbered and as the first mortgagee, the solicitors are in a position to realise value for the debt. There is no reason to suppose there can be any defence that might hold up the solicitors realising those assets. Judgment mortgage enforcement can be slow, but with determination that can be expedited before the courts.

Summary

8. A summary of the overall situation would be: the company is not dynamically managed, possibly due to internal wrangling that has now perhaps been put in the past; the company ‘hides its head in the sand’ possibly due to the illness of the principle; the company has assets that constitute value that is in all probability a multiple of the debt claimed; there is a difficult task in overturning the judgment debt, the nature of which task is not recognised within the company; attention to the bills of costs and to the impending marking of the judgment debt would likely have alleviated much of this difficulty; the sum for legal services is enormous; unfairly, the company did not fulfil through its director a fundamental duty in keeping its assets safe through ordinary attention to important business; finally, there has been an unreal attitude that this debt will go away and that all the unfairness in the overall situation has been visited by others on the company – and that with no recognition of poor management.

Companies Act 2014

9. The starting point is considering that once a debt is due and unpaid, a creditor is entitled, as of right, to seek a winding‑up order. This principle reflects the idea that insolvency, including insolvency established through the statutory “deemed unable to pay its debts” mechanisms such as non-compliance with a statutory demand, justifies the intervention of the court for the protection of creditors. However, this right is not absolute. The way that s 569(1) is framed makes it that, whether by actual evidence or by reliance on the deeming provisions by a petitioner, a court is not compelled to order a company’s winding up. The options available to a court are therefore to grant, adjourn, or dismiss the petition. There is an inherent equitable jurisdiction which equates to an “overriding and unfettered discretion to refuse to order to wind up the company” which ought only be “exercise[d]...sparingly and where good cause is shown”; Re Burren Springs [2011] IEHC 480 Laffoy J, citing MacCann and Courtney Companies Acts 1963 - 2009 (2010 Ed).

10. For completeness, section 572(1) of the Companies Act 2014, as amended by the Employment (Collective Redundancies and Miscellaneous Provisions) and Companies (Amendment) Act 2024 provides statutory discretion in considering a winding-up petition:

(1) On the hearing of a winding-up petition, the court may—

(a) dismiss the petition, or

(b) adjourn the hearing conditionally or unconditionally, or

(c) make any interim order, or any other order that it thinks fit, but the court shall not refuse to make a winding-up order on the ground only that the assets of the company have been mortgaged to an amount equal to or in excess of those assets, or that the company has no assets.

(2) The court shall not make an order for the winding up of a company unless—

(a) the court is satisfied that the company has no obligations in relation to a bank asset that has been transferred to the National Asset Management Agency or a NAMA group entity, or

(b) if the company has any such obligation—

(i) a copy of the petition has been served on that Agency, and

(ii) the court has heard that Agency in relation to the making of the order.

(2A) In deciding whether it is just and equitable to make an order under this section the court shall have regard to whether the requirements of section 571(1A) have been met.

(3) In subsection (2) “bank asset” and “NAMA group entity” have the same respective meanings as in the National Asset Management Agency Act 2009.

(4) Upon the making of an order to wind up a company, based on a ground referred to in paragraph (a), (b), (c), (e) or (f) of section 569(1), the court may order that the company be wound up as if it were a members’ voluntary winding up and, in such event, the provision of this Part shall apply as if the company were being so wound up.

(5) Where a petitioner does not proceed with his or her winding-up petition, the court may, upon such terms as it shall deem just, substitute as petitioner any person who would have a right to present a petition in relation to the company, and who wishes to proceed with the petition.

Discretion on winding up a company

11. Several principles inform the way in which courts have exercised their power to refuse a petition to wind up a company. In Re Genport Ltd [1996] IEHC 34 it was made clear that, even under the wording of s 213 of the Companies Act 1963, the predecessor to s 569 (1), the power conferred was a discretionary one, permitting the court to determine whether making the order would be fair, just, and consistent with the purposes of the winding‑up jurisdiction. There McCracken J quoted with approval the statement of McCarthy J in Re Bula Ltd [1990] 1 IR 440 stating that “a creditor is prima facie entitled to his order so as to shift the initial burden to those who oppose the winding up”. Instead, the onus shifts to the company opposing the order, requiring them to proffer reasons as to why the court’s discretion should be exercised against making the order. Perhaps four other principles relating to this discretion were identified in Genport: first, the court may take account of an ulterior motive, even if not improper, where it is suggested that the petition is being used tactically rather than for genuine debt enforcement; second, the court will have regard to the interests and wishes of the general body of creditors, giving particular weight in that case to independent trade creditors who may have been in those circumstances prejudiced by liquidation; third, the court may refuse an order where winding up would destroy the company’s core assets or disrupt substantial ongoing litigation, thereby harming the collective interests of creditors; and fourth, the discretion is flexible, permitting the court to, as was the case in Genport, stay rather than dismiss a petition where this better preserves fairness and the parties’ positions pending the resolution of related proceedings. Here, there is one petitioner – supported by no one else.

12. Re Bula Ltd [1990] 1 IR 440 identified a further factor which may be considered when refusing to wind up a company: the court may decline to wind up a company in the case where there is a collateral purpose, which was, in that case, of defeating a judgment‑mortgage priority, which constituted an abuse of process; this, together with the fact that receivership already afforded all the practical remedies that liquidation would provide, led the Court to decline to make a winding‑up order. In Bula, the Supreme Court held that the winding‑up jurisdiction should not be invoked where it added nothing of substance to the protection of creditors or the management of the company’s assets. This principle arose as a receiver had already been appointed by the secured creditors, and that receiver’s powers were “effectively… at least as great as that of a liquidator.” The receiver already had full control of the company’s sole asset, there an ore body, and the statutory power of sale available to a liquidator would not have improved the situation. Thus, making a winding‑up order would not have, in any case, enhanced the management, preservation, or realisation of assets, nor produce any additional help for the general body of creditors. Here, there are judgment mortgages registered for the very substantial fees of the solicitors.

13. Moreover, the nature of the debt may itself be a material consideration. Where the debt concerns, for instance VAT and PAYE/PRSI, taxes collected from customers or employees and held in trust for the State, courts may be less willing to adjourn, as permitting delay would undermine the statutory obligation to remit such funds promptly; Re Burren Springs Ltd [2011] IEHC 911.

14. In Re Coolfadda Developers Ltd [2009] IESC 54, the Supreme Court further held that an adjournment could not be granted to allow a company to continue trading or finish ongoing projects. Such a request did not, in that case, amount to the “exceptional circumstances” required to justify postponing a winding‑up petition. Denham J emphasised that the company’s proposal to continue trading long enough to complete its various building projects and realise value from them was too contingent on uncertain factors and generally uncertain to justify delaying the petition, as it depended on a series of speculative assumptions. This, she explained, in effect operated as asking the court to allow the provisional liquidator to “act to some extent as if he were an examiner,” which fell outside the purpose of the winding‑up jurisdiction. Consequently, the adjournment sought was held to be improper and the petition was dismissed.

15. This point was re-emphasised in Re Heatsolve Ltd [2013] IEHC 399, where it was held that while the winding‑up jurisdiction under s 213 was discretionary, that discretion could not be used to give a company time to “trade out” of difficulty or to convert a winding‑up petition into de facto examinership. The Court stressed that a debtor could not be permitted to resist liquidation merely on the basis of hoped‑for future improvement:

20. It must be recalled that the examinership process has its own in-built safeguards and protections designed precisely for this purpose. The Court must accordingly ask whether the company has "a reasonable prospect of survival....as a going concern" before an examiner can be appointed: see s. 2 of the Companies (Amendment) Act 1990 (as amended). The entire process contains a series of checks and balances designed to protect the company and creditors alike. One such safeguard which may be cited by way of representative example is that contained in s. 3 (3 A) of the 1990 Act, namely, the requirement that the examinership petition be accompanied by a report of an independent accountant to guide the court on the question of the likely prospects of survival of the company. As Fennelly J. pointed out in Re Gallium Ltd. [2009] IESC 8, [2009] 2 I.L.R.M.

11 "it is now natural, depending on the standing and expertise of its author, for the court to place particular reliance" on such a report.

21. No similar safeguards exist in the context of the winding-up process. Thus, for example, had Heatsolve applied for examinership I would have had the benefit of the report of an independent accountant to assist me on the question of whether the company was likely to survive as a going concern and the implications for creditors were an examiner to be appointed. In these circumstances the Court could not legitimately superimpose the complex examinership process onto the winding-up process. If any such significant changes are to be effected in respect of the structure of the general law of corporate insolvency, this could only come about as a result of legislative change by the Oireachtas.

22. This is not to suggest that the Court must mechanically accede to every creditor's petition once satisfied that the formal statutory proofs have been satisfied and the liability of the debtor clearly established. It is clear from a long line of cases such as Bula, Genport and Burren Springs that such an approach would not be appropriate. The Court could clearly, for example, adjourn the petition for a short time - perhaps measured at most in weeks - to facilitate the company to raise funds or to receive an expected payment. But what it cannot do on a winding-up is to grant a form of protection to the company from its creditors akin to the examinership process predicated on an assessment of the company's likely prospects of survival.

23. One may summarise by observing that a company seeking to resist a winding-up petition will not normally be in a position to do so on the ground that, given the opportunity and a breathing space from its creditors, it has a reasonable prospect of survival as a going concern and would thus in time be able to discharge the debt of the petitioning creditor. Such an argument, if it is to be made at all, must normally be advanced by the company by way of an application for examinership rather than by means of a defence to a winding-up petition.

16. In line with maintaining clear demarcations between the winding-up jurisdiction and that of examinership, it has also been clarified that while the impact of liquidation on employees is relevant, it cannot serve as a decisive basis for refusing a winding‑up order where the statutory criteria have otherwise been met. In Re Decobake Ltd [2019] IECA 169, the company argued that liquidation would jeopardise approximately 40 jobs, but the Court held that this consequence, however unfortunate, is an inherent and contemplated feature of corporate liquidation, and therefore cannot override a creditor’s entitlement to wind up an insolvent company. Costello J observed that accepting such an argument “would amount to driving a coach‑and‑four through the provisions of the Act”, noting that the Oireachtas has already provided specific statutory protections for employees, in the form of preferential payment of certain claims in the liquidation regime. The winding‑up jurisdiction therefore cannot be transformed into a mechanism for employment protection or business preservation, as those objectives are instead addressed through other statutory processes.

17. One further factor identified in Re Leston Property was the presence of a bona fide dispute as to the debt itself where liability, in that case for rent, was genuinely and substantially contested. There, due to the operation of a rent‑suspension clause invoked during the pandemic, it was held to be inappropriate to wind up the company without allowing those contractual issues to be resolved by arbitration or litigation. Butler J further noted that payment capacity was relevant, observing that the company had lodged the full amount of the statutory demand with its solicitors, demonstrating that the non‑payment was not driven by inability but by a real legal dispute, and that such conduct weighed against liquidating the company. Additionally, the commercial reality that liquidation would not provide an immediate or meaningful benefit to the landlord in that case was considered, given that any replacement tenant would face the same legal constraints on business operation, thus reducing the utility of winding up.

18. Additionally, in Re La Plagne Ltd [2011] IEHC 91 Laffoy J stressed that a petitioner cannot contrive or manufacture insolvency, and then rely on that contrived situation as a basis for liquidation. That is, of course, a circumstance that might be quite particular to that case. However, another more generally applicable factor was identified; the potential effect that liquidation would have on the company’s continuing commercial activity:

Counsel for Mr. Ronan characterised the outcome of a winding up order made by the Court on the petition of Mr. Fraher as "corporate patricide". In my view, that is not an exaggeration. The company's three retail subsidiaries are trading. There is no evidence of any concern on the part of their trade creditors. Their respective financial commitments to their bank, AIB, are being serviced. If the Court were to make an order winding the company up compulsorily, inevitably, the official liquidator would have to consider disposing of the company's shareholdings in the retail subsidiaries, in the context of the winding up. As opposed to that, in the final paragraph of his affidavit, Mr. Ronan has averred that allowing the company to continue and allowing the retail subsidiaries to trade will result in viable businesses surviving, 120 staff members retaining their jobs and AIB having its loans serviced by repayments of capital and interest.

19. Finally, Re Leston Property Ltd [2021] IEHC 513 outlines that courts retain a significant measure of discretion in deciding whether a winding-up order should follow as outlined at [15]:

[E]stablishing liability on the part of the company for an undisputed – or undisputable – debt of at least €50,000 is not the end of the matter. It merely brings the petitioner's claim within the scope of s.570 and deems the company unable to pay its debts. This in turn means that the petition then satisfies one of the grounds upon which a company may be wound up under s.569(1), in this case s.569(1)(d). Whilst in many instances establishing one of the grounds in s.569(1) will suffice to ensure that a petition is successful, it should nonetheless be borne in mind that a winding up order does not automatically follow. The court has an overriding discretion to refuse the petitioner's application. Some of the types of circumstances in which that discretion will be exercised so as to refuse an order which would otherwise normally be made are evident from the decided case law. However, given that the court is exercising an unfettered statutory discretion, previous case law cannot be read as placing any limit on the exercise of that discretion, save of course that once the qualifying statutory criteria under s.569 have been met, the reason for any decision refusing to wind up the company should be clear from the court's judgment.

Summary of principles

20. Three foundational principles can be identified:

• Once a petitioner proves a debt and inability to pay, they are entitled bring a winding‑up petition.

• The petitioner does not need to show that liquidation will benefit creditors; once the relevant statutory ground is established, the onus shifts to the objector to show why the court should refuse.

• Even where s 569 is met, a winding‑up order does not automatically follow; the court may refuse the order for principled reasons.

21. A number of factors have been recognised in this case law as relevant to the court’s assessment of whether it should grant or refuse a winding‑up order under the third principle. An attempt to summarise a principled approach would yield these issues:

• Whether there is a bona fide dispute as to the debt;

• Whether the petition has been brought for an ulterior or tactical purpose, even if the motive is not improper, or whether it represents an abuse of process;

• Whether the insolvency has been contrived or engineered by the petitioner, and is then sough to be relied upon as an argument in favour of winding up the company;

• Whether the winding up would bring meaningful benefit to the situation;

• What nature of the debt is, such as in the case of monies held in trust;

• What the wishes of creditors and contributories are, the view of independent creditors carrying more wright than insiders’;

• What the impact on employees would be; this is a factor that can be considered but it cannot be the decisive reason in granting or not granting a winding-up order;

• Whether liquidation would destroy ongoing businesses or commercial structures;

• Whether liquidation would prematurely terminate substantial ongoing litigation capable of yielding assets for creditors; in these cases the court may stay or refuse a winding‑up petition;

• Whether disputes can be resolved through arbitration, oppression proceedings, or litigation; the court may refuse winding up so that these remedies can operate;

• Finally, the winding-up jurisdiction cannot be used to give the company time to trade out of difficulty or obtain de facto examinership protection.

Application of principles to this case

22. On these facts, immediate liquidation is unnecessary to protect the debt. This approach is not an attempt to enforce an examinership jurisdiction by another name. What is proposed here is declining the more drastic insolvency remedy, in that it is unnecessary and disproportionate on the facts. The petitioning solicitors possess adequate enforcement routes of a High Court judgment and have moved to obtain the remedy of judgment mortgages over specific properties. The company, while poorly managed of late, remains a trading business with staff and identifiable assets. The court’s discretion accommodates this outcome: the debt is capable of enforcement by ordinary means without using winding up as a collection tool. Less intrusive remedies exist and the company can continue to meet obligations while those are pursued, making compulsory liquidation unwarranted and unjust in the current circumstances. It is therefore necessary to consider whether the other statutory ground relied upon is truly engaged, and in particular whether the company is unable to pay its debts “as they fall due.”

23. When courts ask whether a company can pay its debts “as they fall due”, they apply the cash‑flow insolvency test. The question is whether the company can meet its actual, current obligations at the time they must be paid in the ordinary course of business. Even if a company’s assets exceed its liabilities on paper, it may still be insolvent if those assets cannot be realised in time to satisfy debts when payment is required; the true inquiry is therefore a practical one of whether the company, using available cash or readily realisable assets, can discharge obligations as they mature. In Re Connemara Mining Company plc [2013] IEHC 225, Laffoy J reaffirmed that this is the operative standard in winding‑up petitions. The court must assess solvency as at the petition date by considering whether debts were capable of being met from cash, near‑cash, or credible and immediate sources of funding, while discounting assets that are illiquid or whose future value is uncertain. The “as they fall due” test thus requires not a long‑range financial projection but a realistic evaluation of the company’s short‑term ability to meet liabilities in the ordinary course. The case of Promontoria Oyster DAC v O’Connor [2023] IESC 31 is also instructive, notwithstanding the fact that it arose in the context of personal insolvency. In Promontoria, the Supreme Court approached the insolvency inquiry in a way closely mirroring the logic underpinning the corporate cash‑flow test. It was held that the statutory requirement to pay debts “as they fall due” imports a temporal and commercial‑reality dimension, and that assets count only if they are capable of being realised within a timeframe that realistically aligns with the debt’s due date.

24. The following cannot be denied: The creditor has (i) a statutory demand unpaid after 21 days and (ii) a large judgment debt presently due. Taken together with the company’s refusal to apply €400,000 available the same day, the company has, at first glance, not shown cash or readily realisable funds that can be mobilised within the relevant timeframe to meet an already‑enforceable liability. However, the default judgment arises from, what is claimed to be untaxed and allegedly un‑agreed professional fees, and the company indicates it will seek adjudication and an application to set aside the default judgment. The company strongly appears to be asset‑rich and the petitioning solicitors already hold judgment mortgages over identified non‑core assets, offering an alternative enforcement route that does not require liquidation. These facts do not negate the engaging of the deeming provisions. They do, however, inform the discretion available to this court as to whether a winding‑up order should issue now or whether alternative means would adequately protect the creditor without the effects of liquidation. The company is engaging in ordinary trading. Prospects for commerce in renovation and rebuilding the homes of Donegal are buoyant. On this, the company can meet debts as they fall due, making immediate liquidation unnecessary for present payment. The company is not seeking time to keep trading, but rather has identifiable secured assets that can be realised to meet the debt without court protection.

Result

25. The winding up of a company is a grave step. Here, it would put 23 employees potentially on the dole. While, in the usual to-and-fro, it is asserted that the proposed liquidator, who is clearly a qualified person, might keep the company working as a going concern, the step of winding up would likely come as a seismic shock in the close community of Letterkenny and the building trades in Tyrone and Donegal. Judgment mortgages already secure much of the debt marked. This can be realised in an efficient court list. What is a valuable business with considerable goodwill and historical draw would be likely severely undermined. There may be further difficulties if the Ulster Bank debt proves recoverable by its assignee. But, that is not now. The company can trade and will trade on. Better management and a more real attitude is needed. The company can trade and pay debts as they fall due. This very large legal fees debt is secured, at least in part and perhaps fully, by other means. In the exercise of judicial discretion, the balance favours refusal of this petition.

26. Since this situation was entirely engineered by default on the company’s part, the indicative order is that costs cannot be awarded to the successful party. Perhaps the Court can be otherwise persuaded as that is only a preliminary view.