The government has announced that the restrictions on presenting winding-up petitions put in place by the Corporate Insolvency and Governance Act 2020 on 26 June 2020 are set to be lifted from 1 October 2021.
The restrictions were initially brought in place to prevent viable businesses from being forced into insolvency as a result of financial difficulties caused by the COVID-19 pandemic.
As lockdown restrictions which significantly affected the trade of most businesses have been eased since 19 July 2021, the government believes that now is a good time to phase out the remaining temporary measures in force under the Act.
However, new legislation which is expected to remain in place until 31 March 2022 will be introduced to protect excessive pressure being placed on debtors by creditors for the repayment of small scale debts which do not exceed the new threshold of £10,000. This is a significant increase from the previous threshold of £750 which was in place previously.
The new legislation will also ensure that creditors, who do meet the above threshold and decide to go ahead with a winding-up petition, try to make proposals for payment with the debtor beforehand and provide them with 21 days to issue a response.
The current restrictions on winding-up petitions in relation to commercial rents will remain in place until 31 March 2022.
Posted on September 13, 2021