Validation Order applications

If your company has received a winding up petition and its bank account has been frozen as a result, our team of experts can assist. A Validation Order can unfreeze the company’s bank account allowing you to continue trading and significantly reduce the risk of personal liability as a result of trading the business whilst subject to a winding up petition.

What is a Validation Order?

Essentially, a Validation Order is a court order which authorises a company to continue trading notwithstanding being subject to a creditor’s winding up petition. A Validation Order is usually required to unfreeze a company’s bank account and effectively authorises (i.e. ‘validates’) payments and other dispositions that the company is required to make as part of its business operations.

The payments can include:

• Payments out of the company’s business bank account in the usual course of its business such as payments to key suppliers, HMRC, trade creditors, rent and utilities and employees.
• Disposing of tangible and intangible assets owned by the company (for example, shares and other property assets)
• Any other payments or dispositions that the company is required to make in the ordinary course of its business.

It is very important to appreciate that the court will only grant a Validation Order if it is satisfied that doing so will not prejudice or make worse the interest of the company’s unsecured creditors as a whole. For example, a Validation Order application for a specific transaction that would have the effect of reducing the company’s assets available to creditors in a proposed insolvency process is unlikely to be permitted by the court.

Edwin Coe has many years of experience in assisting businesses obtaining Validation Orders and unfreezing bank accounts allowing businesses to continue trading, despite to being subject to winding up petitions.