Where a company applies for a validation order, a court fee is payable as part of the application process. This fee forms only one element of the overall cost of obtaining a validation order, but it is important that directors understand how costs arise and how they are typically dealt with by the court.
A validation order application is most commonly made where a company’s bank account has been frozen following the presentation of a winding up petition. In those circumstances, obtaining court approval to continue trading lawfully can be critical. While there are costs involved, the consequences of not acting can be far more serious.
What is the court fee for a validation order?
A validation order application attracts a standard insolvency application court fee, payable when the application is issued. The exact fee is set by the court service and may change from time to time.
The court fee covers the administrative cost of issuing and processing the application. It does not include any legal costs or advocacy fees.
What other costs are involved?
In addition to the court fee, a company should expect to incur professional costs associated with preparing and presenting the application. These typically include:
- Solicitors’ fees for preparing the application, drafting witness evidence, liaising with creditors, and dealing with the court
- Counsel’s fees where a barrister is instructed to represent the company at a hearing or to advise on complex or urgent applications
The level of professional costs will depend on factors such as urgency, complexity, the quality of financial information available, and whether the application is contested.
Can validation order costs be paid from the company’s bank account?
As part of a validation order application, it is common to ask the court to approve payment of the application costs from the company’s bank account. Where the court is satisfied that the application is appropriate and properly evidenced, it may validate those payments.
In many cases, the court will order that the costs of the validation order application are treated as “costs in the petition”. This means that if the winding up petition is later dismissed and no winding up order is made, the petitioning creditor will usually be responsible for those costs.
However, this outcome is discretionary rather than automatic. The court will consider whether the application was necessary, whether it was made promptly, and whether the evidence justified the relief sought.
What if the application is unsuccessful?
If a validation order application is refused, or if the court considers that it should not have been brought in its current form, the court may order that the applicant bears the costs of the application.
For this reason, careful preparation and early advice are essential. Poorly prepared applications not only risk refusal but can also expose the company and its directors to unnecessary cost.
Are validation orders still worth the cost?
Although validation order applications involve court fees and professional costs, they are often a proportionate and necessary step. A successful validation order can:
- Restore access to frozen bank accounts
- Allow payment of staff, suppliers and essential overheads
- Enable the business to continue trading lawfully
- Reduce the risk of personal liability for directors
- Provide stability while steps are taken to resolve the winding up petition
In many cases, the cost of a validation order is significantly outweighed by the commercial and legal protection it provides.
How Francis Wilks & Jones can help
Francis Wilks & Jones regularly advises companies and directors on validation order applications, including the associated court fees and costs issues. We provide clear advice at the outset on likely costs, funding options, and how costs are typically dealt with by the winding up court.
If your company is facing a frozen bank account or needs court approval to continue trading, early advice can make a critical difference. Contact our team for confidential guidance and immediate assistance.
Our team of winding up petition & validation order solicitors at Francis Wilks & Jones are the best in the country. We specialise in acting for companies who have received winding up orders either from creditors or HMRC. Our advice is fast and highly effective. Contact one of our team of winding up petition lawyers now for help.
