Today, the Government has announced that the temporary insolvency measures brought in by CIGA 2020 will be phased out from 1 October 2021, and that the Government plans to introduce new legislation that will temporarily increase the current debt threshold for a winding up petition to £10,000. In addition, the new legislation will require that creditors must seek proposals for payment from a business, and will allow the debtor 21 days to respond before they can proceed with winding up action. Both of these measures will be in force until 31 March 2022. It is worth noting that this is the first time the debt limit has been increased since the introduction of the Insolvency Act 1986. While this increase will only be temporary, it is a significant one compared to the original sum of £750.
The one significant exception relates to commercial rent arrears. The existing restrictions will remain on commercial landlords from presenting winding up petitions against limited companies to repay commercial rent arrears built up during the pandemic.
Continuing the restriction on winding up petitions in respect of commercial rent supports the announcement on 16 June 2021, that commercial tenants will continue to be protected from eviction until 31 March 2022, whilst the Government implements a rent arbitration scheme to deal with commercial rent debts accrued during the pandemic.
We urge anyone who is concerned about the ending of the temporary insolvency measures to seek advice and to do it now, and we are here to help. Please contact Christina Fitzgerald or any member of the Restructuring & Insolvency team.
If you aren’t receiving our legal updates directly to your mailbox, please sign up now
Please note that this blog is provided for general information only. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content of this blog.
Edwin Coe LLP is a Limited Liability Partnership, registered in England & Wales (No.OC326366). The Firm is authorised and regulated by the Solicitors Regulation Authority. A list of members of the LLP is available for inspection at our registered office address: 2 Stone Buildings, Lincoln’s Inn, London, WC2A 3TH. “Partner” denotes a member of the LLP or an employee or consultant with the equivalent standing.