The Government has confirmed that the temporary Insolvency measures introduced in the Corporate Insolvency & Governance Act 2020, which included a ban on the use of winding up petitions, will be withdrawn from 1 October 2021. There will however be two new temporary changes introduced which will provide further protection to smaller and medium sized firms:
• The threshold on the amount due in order for a winding up petition to be issued is being increased from £750 to £10,000.
• Creditors are required to seek proposals for payment from a debtor business, allowing 21 days for a response, before they can proceed with winding up action.
These new measures will be in place until 31 March 2022.
Whilst an increase in the threshold limit for Corporate winding up petitions has long been anticipated, and brings it more in line with that required in personal insolvency (currently £5,000), it remains to be seen whether this increase will remain post 31 March 2022 or reduce to a lower level to enable recoveries to be made for smaller liabilities.
These measures are in addition to the extension of support for commercial tenants to 31 March 2022 and will provide some relief to businesses, particularly those in the retail, hospitality and leisure sectors, which have been hardest hit by the pandemic. This restricts commercial landlords from presenting winding up petitions against limited companies to repay commercial rent arrears which have built up during the pandemic.
We would advise anyone who is concerned about the ending of the temporary insolvency measures to seek advice as soon as possible. Businesses who seek advice early often have more options open to them, more time to make a decision about their next steps, and more favourable outcomes. You can contact our Business Recovery team at our Manchester office on 0161 608 0000 or email firstname.lastname@example.org