Validation Order Refused
In RC Brewery Limited V HMRC  EWHC1184(CH), the High Court has dismissed an application under Section 127 of the Insolvency Act 1986 for an Order validating the payment of solicitors fees incurred in acting for a company in seeking an injunction to restrain advertisement of a winding up petition. All dispositions by a company made after the commencement of the winding up – the filing of a winding up petition – are void unless a Validation Order is granted by the Court.
The High Court held that the work undertaken by the solicitors was not part of a genuine defence but instead aimed at pressurising the petitioning creditor into accepting payment proposals. The decision reminds us that the Court will not automatically grant a Validation Order where fees are incurred in relation to petition proceedings if the petition debt itself is not disputed.
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