Since June 2020, companies in financial stress due to the impact of the Covid-19 pandemic have been protected from certain creditor action (in particular, statutory demands and winding-up petitions) through the Corporate Insolvency and Governance Act 2020.
Restrictions have since been extended until 30 September 2021; however, the Government has now confirmed that further limited extensions will be made and temporary measures are to be brought in to support businesses during the Covid-19 pandemic.
The new measures, which will be come into force on 1 October 2021, will aid smaller businesses in getting back on their feet before facing their creditors. The new legislation will:
Increase the current debt threshold for issuing a winding up petition against a company to £10,000; and
Require creditors to allow a debtor business 21 days to put forward repayment proposals before winding up action can be commenced.
The current restrictions on issuing winding up petitions against tenants of commercial leases will remain in place until March 2022. This means that commercial tenants will continue to be protected from petitions and evictions (due to non-payment of rent) until this time unless the Government extend the restrictions even further (which appears unlikely).
If you receive a demand from a creditor that threatens a winding-up petition or you are owed money by a debtor and you would like to discuss your options, please get in touch with Farleys’ Insolvency and Litigation team on 0845 287 0939 or contact us by email.
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