Validation orders—dispositions of property after commencement of winding up
Produced in partnership with Eleanor Holland of 4 Stone Buildings and Karl Anderson of 4 Stone Buildings

The following Restructuring & Insolvency practice note produced in partnership with Eleanor Holland of 4 Stone Buildings and Karl Anderson of 4 Stone Buildings provides comprehensive and up to date legal information covering:

  • Validation orders—dispositions of property after commencement of winding up
  • Coronavirus (COVID-19)
  • Why might an application for a validation order need to be made?
  • When to apply
  • How to apply
  • Content of witness statement in support
  • Further considerations
  • Urgent applications
  • When the court will make an order
  • Examples of when a court will make an order

Validation orders—dispositions of property after commencement of winding up

This Practice Note gives guidance as to when it is necessary to apply for a validation order and the procedures to be followed.

Coronavirus (COVID-19)

This content contains guidance on subjects impacted by the Coronavirus Act 2020 and related changes to court procedures and processes as a result of the Coronavirus (COVID-19) pandemic, including the Temporary Insolvency Practice Direction 2020. For further information, see Practice Notes: Coronavirus (COVID-19)—Changes to the court process in insolvency proceedings and The Temporary Insolvency Practice Direction Supporting the Insolvency Practice Direction (June 2021). For related news, guidance and other resources to assist practitioners working on restructuring and insolvency matters, see: Coronavirus (COVID-19)—Restructuring & Insolvency—overview.

Why might an application for a validation order need to be made?

Under section 127 of the Insolvency Act 1986 (IA 1986), any dispositions of property made by a company after the commencement of a winding-up are void.

Examples of dispositions are:

  1. payments out of a bank account; a bank will frequently freeze a bank account when it becomes aware of a winding-up petition, making it impossible to trade

  2. payment of wages, salaries and other day-to-day expenditure by a company

  3. sale of a company asset, such as a land transaction

It should be noted that it is irrelevant whether the disposition is for full market value or otherwise, it is still potentially subject

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