How quickly does the bank freeze the account after the Gazette notice?
Banks usually freeze the account on the day of the notice or within about 48 hours. Some banks are slower than others.
The notice cannot appear until at least 7 business days after the petition is served on the company.
Before the notice, the account normally keeps working, and that is the time to apply.
See stopping the advertisement if the notice has not appeared yet.
How long can a company bank account stay frozen after a winding up petition?
Until the bank has cover to release it. A validation order gives the bank what it needs.
Meanwhile the petition runs to its hearing, where the court can dismiss it, adjourn it or make a winding up order.
If a winding up order is made, the official receiver takes control of the company's property and notifies the bank.
Can part of the frozen funds be released?
Yes. The order can be limited to named payments rather than the whole account.
Where the application is urgent and wages are due, the court may grant limited relief for a short period before all the evidence is ready.
There must still be enough evidence to show creditors are unlikely to be prejudiced.
How quickly can the court deal with an urgent validation order application?
The Practice Direction allows limited relief for a short period where payments essential to trading, such as wages, cannot wait for the full evidence.
In the Royal Courts of Justice, the ICC Judges hear urgent and time-critical applications as soon as reasonably practicable.
I give no turnaround figure on this page, because each court and each case differs. Tell me the payroll date when you call.
Can I pay wages if the company account is frozen?
Wages are the example the Practice Direction gives of a payment essential to continued trading.
Routine trading payments such as wages, rent and suppliers are regularly allowed in validation orders.
Paying wages from another source without an order is still a disposition caught by section 127.
Can I open a new bank account for the company and pay from that?
Opening an account is not the problem. Paying from it is.
Any disposition of the company's property after the petition is void if a winding up order follows, unless the court orders otherwise.
That applies whichever account the money leaves from.
In a winding up, the court can also order a director who misapplied company money to repay it.
Can HMRC freeze a company bank account?
HMRC does not freeze the account. The bank does, once HMRC's petition is advertised.
HMRC usually waits until the last permitted date to advertise, 7 business days before the hearing.
HMRC has no say over the evidence for a validation application. What the court needs is set by statute and the Insolvency Rules.
Read more on HMRC winding up petitions.
What happens to the frozen account if the petition is withdrawn or dismissed?
Section 127 only applies in a winding up by the court.
If the petition is dismissed, no winding up follows from it, and payments since the petition are not void on that ground.
Once the petition is advertised, the petitioner can no longer use the without-notice route to withdraw it.
How quickly a bank then lifts the freeze is a matter for the bank, and I will discuss it with you on the call.
