Restrictions on the presentation of winding up petitions under the Corporate Insolvency & Governance Act 2020 are due to end with the introduction of new measures announced by the Government
Good news – for the most part (unless you are a commercial landlord seeking rent arrears), the restrictions under Schedule 10 of the Corporate Insolvency & Governance Act 2020 (CIGA 2020) relating to winding up petitions are due to cease on 30 September 2021!
Whilst it is not yet entirely clear, it is therefore anticipated that both the requirement to satisfy the ‘Coronavirus Test’ and the non-attendance pre-trial review will fall away.
Changes announced on 9 September
To assist a transition back to normality, the Government has, however, announced that new temporary legislation will be brought in (yet to be confirmed but anticipated to end on 31 March 2022) as follows:
- firstly, the minimum debt threshold allowing a creditor to present a winding up petition will increase from £750.00 to £10,000.00. This has been the first increase in the winding up order minimum limit since 1986 and is aimed to enable smaller businesses the opportunity to recover following the pandemic before creditors are able to take action to wind them up
- secondly, there is a compulsory requirement that, prior to presenting a winding up petition, a creditor is required to give any debtor 21 days to seek to agree proposals for payment of the debt. This will mean that creditors will not be able to reply upon a 48-hour demand letter as evidence of a debtor company’s insolvency if and until the restrictions are lifted
These new measures will be introduced in statute to cover England, Wales and Scotland. Once published, the legislation will hopefully further clarify exactly what is expected of both creditors and debtors during the period that it proposed to cover and we will provide further comment as to its impact once the new legislation has been released so watch this space…
How we can help you
Debt recovery using winding up petitions
Throughout the pandemic, we have continued to work with our clients, constantly adapting to the changes the new legislation has put in place. Despite the current restrictions on the use of winding up petitions, we have still managed to recover significant amounts of overdue debt so there are ways of getting your money back.
The good news is that the restrictions imposed by CIGA 2020 are coming to an end on 30 September 2021 and, after an 18-month period of near inertia, we can now work with you to identify where winding-up petitions will once again become an effective way for creditors to apply pressure to ensure they are paid.
- even if a petition is still not a suitable option for you because of the temporary £10,000, we have the complete range of other services available to help recover your debt, ranging from traditional county court claims to the use of statutory demands and other recovery routes.
- our debt recovery team is happy to advise you on the most suitable recovery option.
Defending winding up petitions
If you find yourself on the receiving end of a winding up petition following the relaxation of the rules, we have the team to help. We can provide urgent legal assistance on the following:
- defending the winding up petition;
- obtaining an injunction at court;
- negotiating settlement of the petition debt;
- getting the petition removed from court;
- obtaining a validation order from the court to allow the company to keep trading;
- getting company rescue and restructuring advice;
- making sure you are fully protected as a director from personal claims from HMRC or liquidators.
Whether it is a petition from a creditor, HMRC or any other party – we have the expertise to assist.
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.