TEMPORARY INSOLVENCY MEASURES ARE ENDING
Released On 20th Apr 2022
The measures aimed at protecting businesses from creditors insisting on repayment of relatively small debts ended on 31 March.
Therefore, as of 1 April 2022, there is the potential for a significant increase in creditor activity following the removal of measures preventing the pursual of most winding-up petitions for around two years.
The Corporate Insolvency and Governance Act 2020 introduced various temporary measures to help protect companies affected by the lockdown restrictions during the pandemic. Most of these expired, however, at the end of June and September 2021, except for restrictions on winding-up companies – which were extended until 31 March 2022.
The Government has said that restrictions will not be extended further, meaning that the insolvency regime will return to its pre-pandemic operation. Therefore, business owners are encouraged to seek professional advice to protect themselves.
As of 1 April, a business could face a winding-up petition for debts of just £750, whereas, under the temporary legislation, the threshold was £10,000. While £750 may be a small amount, owners still need to consider the time, operational and emotional effects of contesting such a petition.
In addition, the majority of restrictions preventing commercial landlords from issuing winding-up petitions against limited companies for unpaid rent during the pandemic also expired on 31 March, so businesses that are concerned about this must seek advice about their problems.
Given that businesses are facing increased energy and fuel costs, which will have a knock-on effect on profitability and cash flow, anyone concerned that their business might be distressed should consider consulting an insolvency professional.
For help and advice on related matters, please contact our Insolvency Director and Appointment Taker Richard Warwick today.
