The Corporate Insolvency and Governance Act 2020 (the Act), which became law on the 26 June 2020, imposed restrictions on creditors seeking to recover debts. On 31 March 2022, these restrictions ended and pre-Covid conditions resumed.
As a result of the Insolvency Service lifting the restrictions brought about by the Act, creditors can present winding up petitions related to debts of £750 or more as opposed to the temporary threshold of £10,000 set in the pandemic. Creditors no longer need to serve a Section 10 Notice or provide a debtor company with 21 days to present a reasonable repayment proposal.
Instead, creditors may rely on a statutory demand that hasn’t been paid as evidence that a company can’t pay its debts. This is sufficient grounds for presenting a winding-up petition.
However, creditors who are landlords should note that other restrictions on winding-up and bankruptcy petitions concerning Covid-related arrears of commercial rent due to forced closure continue to apply. The applications fall under the Commercial Rent (Coronavirus) Act 2022, and landlords should proceed with care and seek specialist advice when dealing with these matters.
The expiry of these restrictions will be welcomed by creditors who have not been able to take action. However, with the recovery of the economy uncertain, it remains to be seen how creditors will take advantage of the relaxed restrictions and whether small businesses will be able to cope.
If you have concerns about pursuing a debtor or about the debts your company owes, please get in touch to seek advice. Our Insolvency Practitioners have decades of experience and offer commercially savvy advice.