Companies face even tougher times ahead as remaining temporary insolvency measures come to an end
08 Apr 2022
At the start of the pandemic, the Government enacted the Corporate Insolvency and Governance Act 2020 (CIGA) in order to introduce a number of temporary restrictions on debt recovery to help companies affected by Covid-19.
Whilst many of these expired or were extended in an altered form the Government announced on the 9 September 2021 that the remaining restrictions on the presentation of winding-up petitions (due to expire on 30 September 2021) would not be extended but would be replaced with more limited measures until 31 March 2022.
These were contained in the revised Schedule 10 of CIGA and prevented Creditors from the presentation of a winding up petition unless:
1. A Debtor’s indebtedness was for £10,000 or more;
2. Said indebtedness was not in respect of unpaid commercial rent (unless it was non-Covid related and the Creditor could prove this);
3. The Creditor had delivered a (written) ‘Schedule 10 Notice’ to the Debtor seeking proposals to settle its indebtedness within 21 days of receipt; and
4. No satisfactory proposal was received from the Debtor to settle its indebtedness within 21 days from receipt of the notice.
Whilst struggling Companies breathed a sigh of relief at the time this was only ever a temporary reprieve and from 1 April 2022 these restrictions have now ceased to apply as part of the Government’s push to return the country’s economy to some form of normality.
That said, many Creditors are likely to hail this as good news so that they may finally pursue their Debtors for long outstanding payments without restriction and once again present a winding-up petition based on a statutory demand for a debt of £750 or more under the Insolvency Act 1986.
However, as the Courts are likely to be inundated with winding up petitions in the coming weeks and months clients are encouraged to seek advice early and be proactive rather than reactive as we return to this pre-pandemic landscape.
Whether a Creditor wishing to present an urgent winding up petition or a Debtor requiring immediate advice in order to defend their position please contact Niten Chauhan, Partner and Head of the Restructuring and Insolvency Team: firstname.lastname@example.org