A sports company has failed in its bid avoid paying a debt by falsely claiming insolvency. The Technology and Construction Court rejected the company’s claim that it was about to go bankrupt, ordering it to pay an adjudicator’s award. The case shows that the courts will take a tough line with businesses that use bogus claims of insolvency as a ruse to avoid payment.
The law says that a company facing enforcement of an adjudicator’s award in court, can apply to postpone the proceedings because it cannot afford to pay the debt. The postponement may be for a set period or indefinitely.
Sports facility operator, Astrosoccer4U, had appointed Bernard Sport Surfaces to lay a pitch at Whyteleafe Football Club in Surrey. There was a dispute over payment for the work, with Astrosoccer4U refusing to pay the bill. Bernard took its claim to adjudication and was awarded over £175,000. Astrosoccer4U failed to pay, so Bernard applied to the court to enforce the award.
Before the case came to court, Astrosoccer4u filed a draft notice of intention to appoint an administrator (NOI) and asked for a postponement of the proceedings. The court had to decide whether the claim of insolvency was genuine or not.
The court found the notice of intention to appoint an administrator had not been filed with Companies House by Astrosoccer, nor were there any minutes setting out the board’s decision to file for administration. In addition, the company was still trading through its website.
The court concluded that Astrosoccer4u was trying to abuse the insolvency process to pressure Bernard into withdrawing the court proceedings. It rejected Astrosoccer4u’s case and ordered it to pay the adjudicator’s award in full.
“The judge was highly critical of Astrosoccer 4U for trying to avoid paying a legitimate debt,” said James Burgoyne, Director – Claims & Technical, Brunel Professions. “The decision will be welcomed by contractors and sub-contractors who win an adjudicator’s award, but still struggle to get their bills paid because the debtor is playing procedural games.”
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