Last week the Government announced that the current restrictions on statutory demands and winding up petitions will end on 30th September 2021. The Government has now confirmed that the current restrictions will be replaced with different measures, aimed at helping smaller businesses. These new measures have been brought in by the Corporate Insolvency and Governance Act 2020 (Coronavirus) (Amendment of Schedule 10) Regulations (SI 2021/1029). They will come into force on 1st October 2021 and will last until 31st March 2022.
The restrictions on serving statutory demands will be removed on 1st October 2021.
Winding up Petitions
The current threshold for bringing a winding up petition will be raised from £750 to £10,000 from 1st October 2021.
It remains the case that a creditor may not present a winding up petition for commercial rent which has not been paid due to the financial effect of coronavirus. This ties in with the extension of the moratorium preventing forfeiture of commercial tenancies which has been extended to 25th March 2022.
Also, creditors are required to obtain a payment proposal from a debtor business, allowing them 21 days to respond, before a winding up petition can be bought against them, unless a creditor can demonstrate to the Court that there is no need to do this. This approach effectively formalises one that has arisen between creditors and debtors since the pandemic began.
This announcement has been welcomed by R3, the insolvency and restructuring trade body. Vice President Christina Fitzgerald, also a partner within Edwin Coe’s Restructuring & Insolvency team, has said “Given the challenges businesses have faced during the pandemic, the new limit is a welcome adjustment.” A link to R3 and Christina Fitzgerald’s full comments can be found here .
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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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