The Court of Appeal handed down a judgment on 11 November 2026 holding that a “see to it” guarantee, properly construed, does not give rise to a debt in a liquidated sum and therefore cannot found a creditor’s bankruptcy petition. In Paul Matthews v BSN (SW) Property Ltd & Anor [2026] EWCA Civ 1442 the court allowed the appellant’s appeal and concluded that the petition was defective.
The appeal concerned guarantees contained in share purchase agreements entered when the appellant bought companies that carried existing loans. The petitioning creditors relied on statutory demands under the guarantees and the County Court made a bankruptcy order. The appellant’s first-instance appeal to the High Court failed, and he brought a second appeal to the Court of Appeal. Lord Justice Nugee delivered the approved judgment for the court sitting with Lord Justices Stuart-Smith and Moylan; the judgment was released to the National Archives on 11 November 2026.
Lord Justice Nugee explained that a creditor’s petition under the Insolvency Act 1986 must be presented in respect of a debt which, at the time the petition is presented, is for a liquidated sum. The court analysed the wording of the relevant clause and concluded that it imposed an obligation to “see to it” that the company repaid its loans rather than creating an immediate contractual obligation on the guarantor to pay a specified sum on demand. That construction, the court held, gives rise to a remedy in damages rather than a petitionable, liquidated debt and therefore goes to the jurisdiction of the court to make a bankruptcy order.
The court also decided not to permit the appellant to withdraw his appeal prior to the hearing despite his non-attendance, explaining that the point went to the jurisdiction to make a bankruptcy order and was of potential general significance. The judgment permitted the appellant to advance the liquidated-sum point on appeal and rejected an estoppel argument advanced by the respondents.
The decision will be of immediate practical consequence to insolvency and commercial practitioners in England and Wales. It restricts the circumstances in which a creditor can use a bankruptcy petition as a debt-collection tool when a guarantee is framed as an obligation to ensure repayment, rather than an immediate undertaking to pay a specified sum. The ruling emphasises the importance of careful drafting where a creditor wishes to preserve the option of petitioning, and it underlines that courts will scrutinise the form of the guarantor’s obligation when deciding whether a petition is valid. The judgment is binding on lower courts in England and Wales and will be a key authority for advocacy on jurisdictional challenges to bankruptcy petitions based on guarantees.
