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Validation Order Refused

In RC Brewery Limited V HMRC [2013] 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.

For further information, contact Nigel Cook, either by telephone on 01306 502294 or by email n.cook@downslaw.co.uk.