HomeFWJ TakeawayCompany rescueBusiness recovery and rescueHow best to recover debts in the face of the Corporate Insolvency and Governance Bill

The implications and restrictions of the Corporate Insolvency and Governance Bill go a long way to protecting debtor companies affected by the COVID-19 emergency. But they will also impact companies and individuals supplying goods and services who may now struggle to get paid by debtors pleading the ‘COVID-19’ defence. With the use of winding up petitions restricted and the prospect of debtors being protected by moratoriums, what options remain for effective debt recovery?

Creditors and other companies or individuals owed money may continue:

  • Sending standard LBAs;
  • Sending out LBAs which threaten the use of winding up petitions, but only if they have been adapted to reflect the changes / conditions proposed in the new Bill;
  • Serving statutory demands. These can be relied upon up to four months after issue. The effectiveness of a statutory demand may be limited if a debtor company has knowledge of and has an understanding as to the implications of the Bill. The timing of the issuing and serving of a statutory demand will be key to ensure that it can be acted upon after the expiry of the ‘relevant period’ (which is as yet unknown and may be subject to extension of up to six months).
  • Issuing standard County Court and High Court claims. Nothing in the Bill will affect the “traditional” types of claim in the County Court and High Court and obtaining a judgment could give rise to other types of enforcement as set out below.
  • Armed with a judgment:
    • Instruct the HCEO to enforce (although not if a debtor then seeks a moratorium).
    • Consider lesser used recovery methods if they are relevant – attachment of earnings orders, third party debt orders or charging orders; or
    • Simply obtain the judgments, sit on them until things “go back to normal” and then proceed as before (e.g. with a winding up petition). At least with a judgment in your “back pocket”, creditors will be ahead of other creditors who might not have taken any action.
    • Issuing winding up petitions. It will still be possible to issue a petition, but certain conditions will have to be complied with first.

For further guidance on debt recovery, please get in touch with Shona Houghton or her brilliant recoveries team.


Case studies

View all case studies

Contact us in confidence