Just and equitable winding up of a quasi partnership

It has often been said that the courts power to wind a company up on the just and equitable ground under Section 122(1)(g) of the Insolvency Act 1986 is rarely used.

However, the case of Dosangh v Balendran & Anor [2025] EWHC 507 (Ch) demonstrates that the court would be prepared to deploy this remedy in certain circumstances.

The second defendant was a company called Webb Estate Developments Limited (“the Company”), which was owned jointly by the claimant and the first defendant. The claimant and the first defendant were the directors of the company. The company was held by the court to be a quasi partnership.

The relationship between the claimant and the first defendant had irretrievably broken down and they were unable to agree on the future direction of the company. The claimant therefore sought the just and equitable winding up of the company on the basis of that deadlock.

The first defendant defended the claim and also made a series of offers to purchase the claimant’s shares. The court assessed those offers, and determined that:-

• The first offer was entirely unrealistic and was never likely to be accepted
• The second tranche of offers became more realistic from a financial standpoint, but set contingencies and conditionality that would only ever have led to a further dispute between the parties. Therefore, the second tranche of offers was also unrealistic.

The court therefore ordered that the third defendant be placed into a just equitable winding up.

The case demonstrates the following:

• That the court is prepared to deploy the just and equitable winding up remedy in circumstances where it is justified.
• Circumstances that will justify the order include a total breakdown in the relationship of trust and confidence between quasi partnerships, and genuine deadlock at board level, meaning that the company can’t continue to pursue its objectives
• The court will also consider exercising the remedy even if there is an alternative one available, such as a buy out. However, the court will be influenced in making a just and equitable winding up order in circumstances where the offer is not bona-fide; an offer that is not realistic is not a genuine attempt to resolve the dispute.

Therefore, the case indicates two important points:

1. The court will entertain the just and equitable winding up remedy if the circumstances of the case fit the dramatic nature of that remedy, particularly in circumstances where quasi partners can’t agree on a sensible way forward for the company
2. That if offers are to be made to purchase the claimant’s shares, they must be realistic as an alternative remedy.