Appeal against liquidation dismissed

An appeal against the liquidation of Hat & Mitre plc has been dismissed with the Court of Appeal ruling that the appellant had standing to appeal as a contributory but was unable to establish a legitimate interest in the relief sought due to the minimal value of his shareholding.

Property holding company Hat & Mitre plc was placed into liquidation following financial difficulties as it became cash-flow insolvent. The appellant, an advisor to two of the company’s majority shareholders and himself a contributory by virtue of his ownership of ten unregistered shares, challenged the liquidation order.

The appellant argued that the process was unjust, and that the liquidation was not in the best interests of the stakeholders. The appellant sought to have the liquidation order overturned, claiming that the company could still be salvaged, and that the liquidation would cause undue harm to the creditors and other stakeholders.

The Court of Appeal, however, found that the appellant’s evidence was speculative and lacked concrete proof of a viable alternative to liquidation. By this point the company’s main asset had been sold, its proceeds substantially distributed, and the other shareholders unanimously opposed the appeal.

The Court ruled that the appellant, while having standing as a contributory, did not demonstrate a legitimate interest in the relief sought due to the minimal value of his shareholding. He was unable to rely on his interests under a memorandum of understanding and an option agreement to establish standing to remove the joint liquidators or establish the qualifying decision procedure because he no present right to those shares.

The Court noted that the liquidation process had been conducted in accordance with legal requirements and that the decision to liquidate was justified based on the company’s financial state. The appeal was dismissed.

Re: McAteer v Hat & Mitre Plc and others [2024] EWHC 1601 (Ch)