Legal Question in Business Law in United Kingdom

Re: winding up petition

A bank will normally be entitled to refuse to permit dealings on an account when it has notice of a winding up petition because, by virtue of section 127 of The Insolvency Act 1986, in a winding up by the court, any disposition of the company�s property after the commencement of the winding up is void.

In addition, payments to unconnected creditors within six months of the winding up or to connected persons within twelve months may constitute a �preference� which could subsequently be set aside and in order to avoid any liability for such preferences as agent or trustee, any prudent bank could justifiably not permit drawings on a company�s account, once the bank had notice that a winding up had commenced.