Just & equitable winding up

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A just and equitable winding up is a court-ordered process used when a company can no longer function because of a complete breakdown in trust between its shareholders or directors. It is a remedy of last resort but in the right circumstances, it can bring closure and fairness to a deadlocked or dysfunctional business.

At Francis Wilks & Jones, we act for shareholders, directors and companies involved in winding-up petitions under the Insolvency Act 1986. Our lawyers combine deep insolvency experience with commercial sensitivity, helping clients decide whether this route is appropriate and protecting value throughout the process.

What is a just and equitable winding up?

Under section 122(1)(g) of the Insolvency Act 1986, the court may order that a company be wound up if it is “just and equitable” to do so.

This provision is used where internal conflict, mistrust or mismanagement has made it impossible for the business to continue. The company is not necessarily insolvent but the relationship between shareholders has broken down so completely that liquidation is the only fair outcome.

Typical examples include:

• serious disputes between shareholders in 50:50 ownership
• exclusion of a shareholder from management
• loss of mutual trust or confidence between key individuals
• failure to distribute profits or follow agreed strategy
• improper conduct by directors or controlling shareholders

The process differs from a creditor’s petition because it focuses on fairness between shareholders, not the company’s solvency.

When can this type of petition be used?

A just and equitable winding-up petition is usually brought by a shareholder who believes the company can no longer operate fairly. It may follow years of tension or a sudden conflict that leaves the business paralysed.

Common scenarios include:

• Deadlock: where equal shareholders cannot agree on key management decisions.
• Exclusion: where one shareholder has been forced out of management without compensation.
• Mismanagement: where directors have breached their duties or diverted business opportunities.
• Broken agreements: where terms of a shareholder agreement or partnership-style understanding have been ignored.

The court views this remedy as exceptional. It will only grant an order if there is no other effective solution, for example, a share buy-out, unfair prejudice petition, or negotiated settlement.

What does the court consider before making an order?

When deciding whether to wind up a company on just and equitable grounds, the court considers a range of factors, including:

• the extent of breakdown in mutual trust and confidence
• whether one party has been unfairly excluded from management
• whether the company can still function commercially
• whether any alternative remedy exists
• the impact on creditors, employees and wider stakeholders

The court aims to strike a balance between fairness to shareholders and the company’s ongoing viability. Liquidation is never ordered lightly.
If a fair alternative exists, such as a negotiated share purchase, the court may prefer that route. Our lawyers assess these factors early on/at an early stage, advising whether a petition is likely to succeed or whether a settlement should be pursued instead.

What are the alternatives to winding up a company?

Because liquidation usually ends the business, FWJ always explores other options first.
Alternatives include:

• Mediation or negotiation – enabling shareholders to reach a new agreement or restructure responsibilities.
• Buy-out or share sale – one shareholder sells to the other, preserving the company’s value.
• Unfair prejudice petition – a less drastic remedy under section 994 of the Companies Act 2006, allowing the court to order a buy-out or regulate the company’s affairs.
• Derivative claim – where directors have breached their duties and the company itself has a claim under section 260 of the Companies Act 2006.

Our goal is to achieve a fair and practical outcome without destroying the business unnecessarily.

How can FWJ help with a just and equitable winding-up petition?

We act for both companies and shareholders bringing petitions, or directors defending them. Our work includes:

• advising on whether a petition is appropriate or proportionate
• preparing and filing the winding-up petition and supporting evidence
• defending petitions that are commercially motivated or unfairly brought
• negotiating settlements or buy-outs to avoid liquidation
• working with insolvency practitioners to oversee the winding-up process

Our experience spans a wide range of shareholder disputes, from family businesses to complex joint ventures, and we are frequently instructed to resolve these matters before they reach court/to achieve optimal resolution.

Our shareholder disputes team at FWJ includes

Andrew Carter (Partner)

Andrew Carter is a commercial litigation partner with extensive experience resolving shareholder and partnership disputes. He acts for business owners, directors and investors in complex conflicts over control and value. Clients trust his calm, strategic approach and focus on achieving practical, commercial outcomes.

Gemma Newing (Senior Associate)

Gemma Newing is a commercial litigation solicitor with strong experience in contractual and company disputes. She acts for businesses and shareholders in complex claims requiring clear strategy and efficient resolution. Clients value her focus, responsiveness and commitment to achieving practical results.

Anna Beetson (Solicitor)

Anna Beetson advises SMEs, directors and shareholders on commercial and company disputes, with a focus on efficient and practical resolution. She combines strong technical knowledge with a clear, client-focused approach. Her work covers contractual claims, shareholder disagreements and boardroom issues.

Athena Kam (Paralegal; Unregistered Barrister)

Athena Kam supports clients across commercial litigation, director disqualification and debt recovery matters. Drawing on her background as an unregistered barrister, she brings analytical precision and attention to detail to every case. She assists in preparing evidence, drafting submissions and managing proceedings efficiently.

Francis Wilks & Jones is one of the leading law firms in the country dealing with shareholder disputes and just & equitable winding up petitions Whatever your enquiry, contact one of our team today for help.

Francis Wilks & Jones were responsive, available at all times to deal with any of my queries and very reassuring. I would definitely recommend them to deal with proceedings brought on behalf of shareholders – they understood our practical needs.

A shareholder we helped bring unfair prejudice proceedings against a fellow shareholder who had been interfering with the management of the company and damaging its value