HomeFWJ TakeawayCompany rescueBusiness recovery and rescueWhat is a validation order in insolvency?

If your company bank account has been frozen because of a winding up petition – we can help. A validation order application is normally the best way to proceed, allowing you to continue trading and avoiding the risk of personal liability as well. We have been helping businesses since 2002. Let our team of experts help you too.

This is question we are commonly asked and the simple explanation is that it is an order pursuant to Section 127 of the Insolvency Act applied for by a company which has been served with a winding up order – usually for debt recovery purposes from a creditor such as HMRC or a supplier.

  • often a winding up order can lead to a bank account frozen situation, prohibiting any payments out of a company account;
  • even if the company bank account has not been formally frozen, it is still inadvisable to make payments out of the company account as ultimately, if the company is wound up then the directors can be personally liable for those payments.

Therefore, the safest way to always proceed is to apply to court for a validation order pursuant to Section 127 of the Insolvency Act. Validation orders are highly beneficial as they permit payments to be made out of the frozen bank account for the benefit of the business. Those payments include payments to creditors or staff and enable the business to keep trading often out of difficulty.

Reverse the winding up petition

At the same time, validation orders ease the pressure of the winding up order and can lead to the reversal of the winding up order. However, the application is not straightforward and does need expertise in maximising prospects of success. Witness statement evidence in support of the validation order needs to be carefully drafted and you need a proper validation order barrister to attend court on the day to represent the evidence to the judge. At Francis Wilks & Jones we have the expert validation orders team to assist you.

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, effective and highly effective. Contact one of our team of winding up petition and validation order lawyers now for your initial consultation.

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