5. After the presentation of a winding-up petition, AZ Company is trying to raise money to pay off its debts. The company has shown some written evidence to the Court and its creditors regarding such effort. Can the company apply to the Court for dismissing Mr. C’s petition?
A possibility that the company might be able to make full repayment of its debts is not a sufficient ground on which to object to the petition. However, an application can be made to the Court for an adjournment of the winding-up proceedings so that appropriate arrangements can be made with the creditors. The Court has discretion as to whether the Company should be wound up, or there should be further negotiations between the company and its creditors before the granting of a winding-up order.
Suppose the debtor company applies to the Court for dismissal or a stay of (suspend) Mr. C's petition on the ground of cross-claim against Mr. C. What then would be the chance of success by the debtor company? The answer would depend on the fact of each case. Generally, that company must establish a genuine cross-claim with substance in it. The amount of cross-claim itself must exceed the amount of the debt claimed by Mr. C against that company. Where both requirements are met, the court would exercise its discretion to dismiss or stay the petition in the absence of special circumstances.