Freezing of Bank
Accounts

One of the harshest consequences of a winding up petition is the freezing of business bank accounts. At West London Law, we have a wealth of experience in stopping bank accounts being frozen or applying for a validation order to unfreeze company accounts.

Our solicitors have acted successfully for a diverse range of clients, including prominent entrepreneurs, directors of Fortune 500 companies, and SME owners. Our role is to protect business owners' interests against creditor actions. This includes preventing advertisements of a winding up petition being published and strategically applying for a validation order to make post-winding up petition transactions' valid'.

Our founding partner, Gurvir Birang, is recognised as an expert in the field of bankruptcy and winding up law. Therefore, he and his team have a wealth of experience in assisting those adversely affected by the winding up process.

The legal specialists at West London Law are results-focused and have a vast experience in negotiating robust, favourable arrangements for our clients. We have been ranked repeatedly in the legal directories as leaders in bankruptcy and insolvency defence work.

Why are bank accounts frozen if a winding up petition is made?

Banks, like any other business, will safeguard themselves against a company that risks becoming insolvent. Therefore, if your bank is alerted to a winding up petition being made against your company, they have the power to freeze your account.

Things seldom get more serious than this.

A frozen account means you cannot trade. Suppliers, employees, and day-to-day operating expenses cannot be paid/funded.

Banks need to protect their interests because the consequences for not freezing your accounts are serious. If your company becomes insolvent, they can become liable for some of your losses.

How does a bank find out a winding up petition has been issued?

If a winding up petition is issued and the debt associated with it remains unpaid after seven days, the petitioner can advertise the petition in The London Gazette. The London Gazette, which dates back to the 17th century, is the UK's most important official journal. As well as notices of winding up petitions, the readers can find bankruptcy petition notices, company voluntary arrangements notices, and liquidation notices.

A court will not wind up a company unless the petition has been advertised in the London Gazette. The notice must be advertised for seven days before court proceedings to issue a winding up notice begins.

If you have been issued with a winding up petition, your bank or their agents will see the advertisement in the Gazette and immediately freeze your bank accounts.

Can I prevent an advertisement of a winding up petition?

To prevent the advertisement of a winding up petition, you can seek a court injunction. An injunction application will usually succeed where:

  • The debt is genuinely disputed
  • Across claim or a right of set off exists which would reduce the debt to below £750
  • The winding-up petition is bound to fail on a matter of fact or law
  • The petition is oppressive or unfair
  • The petition has been presented for a purpose other than to have the company wound up
  • Where the alleged creditor has another, better remedy available to them

How can I unfreeze my bank accounts?

To unfreeze your bank accounts you can apply for a validation order or company voluntary arrangement (CVA).

Validation order

Section 127 of the Insolvency Act effectively makes any disposition of the company's assets after commencement of winding up void unless the court otherwise orders. A validation order stops a liquidator from holding your bank liable to pay back any money withdrawn.

The court will require evidence as to why the validation order should be granted. Our expert solicitors will collate and present such evidence to the judge. Our team have a robust track record of successfully obtaining validation orders for our clients.

Company voluntary arrangement (CVA)

Negotiating a CVA with your creditors is more advantageous than a validation order. However, such an arrangement can be difficult to obtain if the relationship between you and the creditor has broken down.

A CVA allows you to pay a set amount to creditors over a fixed period (up to five years).

We have a formidable reputation for reaching negotiated agreements, even in the most hostile of situations. We can advise as to whether a CVA is the right solution for you, and if so, negotiate the terms and conditions on your behalf.

You can have complete confidence that when you engage us, you will receive swift, comprehensive legal advice and have strong, experienced negotiators on your side.

To talk to one of our specialist winding up and insolvency solicitors, please phone our London office on 020 8434 3508.

We treat all enquiries in the strictest confidence.

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