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 any member of the Restructuring & Insolvency team.

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.

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