Restructuring & Insolvency analysis: The Privy Council recently confirmed that a winding-up petition should not be stayed or dismissed because the underlying debt is subject to an arbitration agreement, unless the debtor can demonstrate that the debt is disputed on genuine and substantial grounds. The decision represents a deviation away from the previously held decision in Salford Estates (No 2) Ltd v Altomart Ltd that the court should generally exercise its discretion to stay a winding-up petition so that the petitioner can first establish the debt by an arbitration award, unless there are exceptional circumstances. It provides helpful clarification on the interplay between insolvency and arbitration in that it carefully balances the public interest in insolvent companies being placed into an insolvency process expeditiously (and assets realised for distribution to creditors as a whole) and the public policy that those who agree to arbitrate disputes are held to that agreement. Written by Kit Smith, managing associate at Keidan Harrison LLP.
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