On 1 October 2021, the temporary restrictions on winding up petitions found in Schedule 10 of the Corporate Insolvency and Governance Act 2020 (“CIGA”) were phased out. In their place comes a new, temporary regime introduced to protect businesses from the financial effects of the coronavirus pandemic.
The new measures apply for the period 1 October 2021 to 31 March 2022 and set out that a creditor may now issue a winding up petition only on the basis that four conditions are satisfied:
For a winding up petition to be presented, the debt owed must:
- be for a liquidated amount
- have fallen due for payment
- not be an excluded debt
This includes any debt in respect of rent, or any other sum or payment that a tenant is liable to pay under a relevant business tenancy agreement, where the debtor is unable to pay because of the financial effect of coronavirus.
As a result, landlords are still prevented from issuing winding up petitions in respect of rent accruing during the pandemic if the reason for non-payment is the financial effect of the coronavirus pandemic.
The petitioning creditor has delivered to the debtor company a written 21-day notice. The Condition B notice must include the following:
- identification details for the debtor company
- the creditor’s name and address
- the amount of the debt and how it arose
- the date of the notice
- a statement that the creditor is seeking the company’s proposal for the payment of the debt
- a statement that, if no satisfactory proposal is received within 21 days of the date of delivery of the Condition B notice, then the creditor intends to present a petition to wind up the company
The general consensus is that, in view of the requirements of a Condition B notice, a statutory demand issued against the debtor company will not amount to such a notice. However, our view is that delivering a Condition B notice along with the statutory demand, to run concurrently, places the creditor in the strongest position to present a winding up petition upon the expiry of the notice/statutory demand.
Furthermore, the notice could not have been delivered to the debtor company prior to 30 September 2021.
Following expiry of the Condition B notice, the debtor company has failed to put forward payment proposals which are satisfactory to the creditor.
The petition debt must be more than £10,000.00.
A petitioning creditor will have the opportunity to apply to the court for an order that conditions B and C shall not apply, or that the 21-day time period referred to in Condition C be replaced with a shorter period. It is, however, unclear at present how readily the court will grant such an application.
How can we help?
Whether you are a petitioning creditor or a petition debtor, we have the expertise to assist you.
Issuing notices or winding up petitions
Our experienced debt recovery team can advise you on the most suitable recovery option whether it be winding up proceedings or the use of the traditional county court claims system.
Defending winding up petitions
If you find yourself on the receiving end of either a Condition B notice or a winding up petition, we have the team to help. We can provide legal assistance and advice on the following:
- defending a winding up petition
- obtaining an injunction at court
- negotiating settlement of a Condition B notice or a petition debt
- getting the petition removed from court
- obtaining a validation order from the court to allow the company to keep trading
- company rescue and restructuring advice
- making sure you are fully protected as a director from personal claims from the HMRC or liquidators
Speak to our team today
Our team has advised clients in a wide range of winding up petition situations in the past 20 years. Let us help you too.