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femi@loftusstowe.com|Companies in England and Wales
A validation order is the court order that allows the company to keep using its bank account, or to make specific payments such as wages and supplier bills, while the petition is dealt with. I am Femi Ogunshakin, an insolvency solicitor, and I prepare and file the application for companies in England and Wales. Your first 30-minute consultation is free.
A winding up petition is a legal step taken by creditors who believe that a company is unable to pay its debts. If the court grants the petition, the company is closed down and placed into liquidation, and its assets are sold to repay creditors.
Once the petition has been advertised in the London Gazette, the company's bank account is usually frozen. That can severely disrupt the company's ability to operate, even if it intends to challenge the petition.
Read more on what a winding up petition means and what to do now, or on a statutory demand against the company.
A validation order is a court order that allows a company to continue using its bank account, or to carry out specific transactions, after a winding up petition has been issued against it.
It lets the company carry on certain financial activities, such as paying employees or making crucial payments, while the petition is being dealt with. Without it, the freeze can bring the business to a halt before the petition has even been heard.
Read more on what a validation order is and how to apply for one.
The petition follows a set sequence. The freeze usually happens at step four.
Once a winding up petition is advertised in the London Gazette, it becomes public knowledge. That has serious consequences for the company.
Once the petition is advertised, banks usually freeze the company's accounts to prevent money being moved around. That can happen on the day of the notice or within about 48 hours of it.
The advertisement can harm the company's reputation, scaring away customers, suppliers and investors.
Other creditors may join in to demand payment, increasing the financial strain on the company.
To limit these consequences, a company can apply for a validation order, which can unfreeze the accounts and keep the essential parts of the business running while the petition is dealt with.
The bank is protecting the creditors' interests, and its own. Under section 127 of the Insolvency Act 1986, any disposition of the company's property made after the petition is presented is void if the company is later wound up, unless the court orders otherwise. Banks do not want to carry that risk, so they freeze the account. A validation order is the court's permission for the payments the company needs to make, and it gives the bank what it needs to release the account.
Read more on what to do when the company bank account is frozen.
If payroll is days away, say so when you call. I will tell you straight away whether the timing works.
The court is protecting the creditors as a group. An application is likely to succeed when it shows that the payments keep a viable business running and leave creditors no worse off. Routine trading payments, such as wages, rent and suppliers, are regularly allowed. Payments that move value to directors or connected companies are rarely allowed, and only where there is an exceptional case for them.
The application succeeds or fails on its evidence. It goes to the judge in a bundle filed before the hearing, and counsel, instructed by me, argues the case on the strength of it. The judge needs to see that the company is viable and can find a way to settle the debt, so this information is essential once you instruct me:
This is the better position to be in, and it does not last. Once the waiting period passes, the petitioner can advertise in the London Gazette. HMRC usually holds off until the last permitted date, 7 business days before the hearing, while settlement proposals are considered. Other petitioners sometimes advertise as soon as the waiting period ends. Either way, once the notice appears the bank usually freezes the account within a day or two. An application made now can be in place before that happens.
A validation order deals with the payments. It does not address the petition debt itself. Depending on the position there may also be scope to dispute the debt, agree terms with the petitioner, or apply to restrain advertisement. I will tell you which of those apply to your case when I look at the papers.
If you have been served today, get in touch today. The window is measured in business days.
I would rather you knew this before you instruct me than after.
If the petition debt is left unpaid, the court can still make a winding up order. A validation order buys the company room to trade and to find a resolution. It is not a defence to the petition.
A free 30-minute consultation with me to explore your options and protect your business.
You do not need to send any papers before we speak. After the call I send you a written proposal setting out the fee, the scope of the work and what I need from the company. The detailed work starts once you decide to proceed and the fee has been agreed. If an application is unlikely to help, I will say so at this stage.
£10,000 to £15,000 plus VAT, depending on the size of the petition debt. I confirm the figure during or shortly after the consultation, before any work starts.
Indicative fixed fee plus VAT
Currently £115. This cost is included in the fixed fee.
Typically £1,500 to £2,000 plus VAT, depending on chambers, for the barrister who presents the application at the hearing. Payable in addition.
Anti-money-laundering identity checks are also charged in addition. Fees for this work elsewhere commonly range from £15,000 to £35,000 plus VAT.
Who you will deal with
Femi Ogunshakin
Insolvency Solicitor
Validation order applications are a large part of my practice. Most of the petitions I deal with are brought by HMRC, and my time as an HMRC inspector means I know how the petitioning side builds and runs these cases.
You will deal with me directly rather than with an introducer or a case handler. The work is carried out through Nexa Law, where I practise. The first 30 minutes are free.
For the court routes in a particular city, see validation orders for Birmingham, London or Manchester companies.
If your company has received a winding up petition, it is important to act quickly. Call or email me to discuss how to apply for a validation order from the insolvency courts. I offer a free 30-minute consultation to help you explore your options and protect your business.
07867 795 439
Email femi@loftusstowe.com
Prefer a set time? Book your free 30-minute consultation.
Call-back requests are returned the same working day, usually within a few hours. Requests sent out of hours are returned the next working morning.
