Perhaps the one aspect of a winding up petition (WUP) that takes most directors by surprise is when they come to work expecting to pay their employees only to find that their bank accounts have been frozen. This is something which makes it difficult to appeal or dispute a WUP because funds are not available for legal defence and there is no way to carry on business as well. Although all trading should cease during insolvency, there are times when a creditor assumes your company is insolvent when in fact it is just temporarily short of funds. The way to free up frozen accounts is through the Validation Order process and procedure.
Although it isn’t referred as such, a Validation Order is outlined in the Insolvency Act 1986, Sections 284 and 127. In effect, a Validation Order is issued by the court to allow the banks to unfreeze all or a portion of your funds. The court may also state the money can be used for specific purposes such as in paying workers or certain creditors (usually the petitioning party or HMRC), or the order can be a general lifting of the freeze. There is a specific procedure to follow when applying for a Validation Order.
Unfortunately, as with anything else that is mired in legal jargon, applying for a Validation Order can be a bit trying on the nerves. The court requires certain information but the nature of this information varies from one situation to the next. However, most often the application will ask for:
This is by no means a complete list but it gives a broad idea of just what is required when making an application for a Validation Order to unfreeze accounts. When HMRC is the creditor who has petitioned to wind up your company, there may be even more required of you in terms of what the court will ask for. Not only will this complicate the process enormously but it will also be harder to fight.
Real Business Rescue has years of experience in guiding clients through the Validation Order application process. Call today for a free consultation if you are faced with frozen account so that we can help you make the quickest and most direct application for your particular circumstances. An insolvency specialist is on hand at 0800 644 6080 to answer any questions you may have.
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