Government starts to end interim insolvency measures.
The UK businesses brace themselves for the UK government legislation to support small businesses since the end of restrictions on winding up petitions, Midnight September 30th 2021.
Since the introduction of the Corporate Insolvency and Governance Act 2020 (CIGA) in June 2020, it has restricted creditors from serving statutory demands, along with winding-up petitions for debts due to the effects of the COVID-19 pandemic.
Before the restrictions finally ended, the government introduced the Corporate Insolvency and Governance Act 2020 (Coronavirus) (Amendment of Schedule 10) Regulations 2021. Aimed at protecting smaller companies, allowing them time to get back trading while ring-fencing them from the actions of aggrieved creditors.
From October 1st 2021, until March 31st 2022, the threshold for commencing a winding-up petition has increased from £750 to £10,000.
The company’s creditors must write to the company about how they intend to repay their debt within 21 days. If the debtor fails to respond, the creditor can present a winding-up petition.
A creditor can apply to the court for permission not to write to a company or give a company less than 21 days to put forward repayment proposals.
The winding-up petition must contain a statement confirming the regulations have been complied with.
However, the regulations do not amend the sections of the Insolvency Act 1986. (The part dealing with the disposition of property between the presentation of a winding-up petition and the winding-up order date.) So effective October 1st 2021, UK banks may freeze company bank accounts once advised of a winding-up order on a company.
The provisions suspending liability for wrongful trading expired on June 30th 2021, allowing creditors comfort knowing that company directors should only trade without worsening the company’s financial position.
For further updates, please contact John Waller on 0800 612 5448.