LEGAL PRINCIPLE: COMPANY LAW — Winding-Up — Inability to Pay Debts — Winding-Up Petition Not Appropriate Where Debt Is Bona Fide Disputed
PRINCIPLE STATEMENT
A winding-up order will not be made on a debt which is disputed in good faith by the company.
RATIO DECIDENDI (SOURCE)
Per Onu, JSC, in Air Via Ltd. v. Oriental Airlines Ltd. (2004) NLC-132000(SC) at p. 15; Para A.
"A winding-up order will not be made on a debt which is disputed in good faith by the company."
EXPLANATION / SCOPE
A winding-up petition is not appropriate for a bona fide disputed debt. The principle applies to company law. The creditor must first establish the debt. The rule protects companies from premature winding-up. The court will dismiss the petition. The principle is well-established.
