Pandemic $ Winding-up petitions

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Written by:

John A Waller


Reviewed: 4th August 2021.

Winding-Up Petitions and Coronavirus!  

Winding-up petitions-and-coronavirus COVID-19 pandemic continues to impact individuals and businesses throughout the United Kingdom.

For immediate help & free advice, please call 0800 612 5448 and speak with a member of ‘the team at HBG Advisory‘.

The UK government has suspended winding-up petitions and statutory demands until 30th September 2021 under the Corporate Insolvency and Governance Act 2020 (“CIGA”) .  

A winding-up petition remains a robust method to collect unpaid debt, and can lead to compulsory liquidation of your company.

The three lockdowns along with the Coronavirus COVID-19 continues to impact the UK’s financial economy and that of many limited companies and businesses. Therefore, Rishi Sunak has introduced support for businesses throughout the UK during these unprecedented times. Not all though are permanent measures though they will remain as long as they are required to enable struggling firms to pay their creditors and employees as and when due.

Can creditors of my business issue a Winding-up Petition?

Usually outside the pandemic, Yes!

However, since 27th April 2020, the UK government has suspended creditors from issuing winding-up petitions and statutory demands due to the onset of the coronavirus COVID19 pandemic.

Currently, the suspension has been extended to 30th September 2021. However, a provision in the latest allows parliament to extend this on short notice.

Then Compulsory liquidations will commence. Please read ‘what is a compulsory liquidation‘, as you may ask ‘why choose a voluntary rather than compulsory liquidation’? 

However, it is worth reading further ‘winding up petition from company creditors what then‘ for reference.

Winding-up petitions and coronavirus – Does protection exist for my business?

In March 2020, the UK government introduced the Coronavirus Act 2020. The act protects UK businesses due to the current pandemic.

Importantly for commercial tenants, a condition provides that businesses unable to pay rent directly due to the pandemic avoid eviction.

Further, the Corporate Insolvency and Governance Act 2020 stopped a creditor from issuing a winding-up petition unless the Coronavirus condition is fulfilled. That is, a creditor must believe that either:

  • COVID-19 has not financially impacted the company.
  • The debt applies even if COVID-19 had not had a financial impact on the company.

Before submitting a winding-up order!

The courts may issue a winding-up petition if the claimant can fulfil this condition, failing which, rejection.

Can my business creditors issue a CCJ during the pandemic?

Providing the creditor of your company is owed money, and you have not paid it. The creditor can then apply for a County Court Judgement‍ (CCJ) for payment. However, the debtor remains required within thirty days of the issue date of the judgement to pay the judgement in full to avoid the judgement noted on the debtor’s credit file.

The first lockdown instigated the suspension of bailiffs’ visits. However, they were reinstated in August 2020, allowing visits and entry, provided the company had a CCJ registered against the limited company.

Winding-up petitions and coronavirus currently

UK Government legislation to oppose the economic effects of the Coronavirus’ pandemic has meant winding up petitions, and statutory demands no longer may be issued until after 30th September 2021 (Subject to change). However, since creditors must convince the courts, the coronavirus has not affected the company financially, and the debt would still apply without it.

Nevertheless, your business creditors can still take steps to recover the debts owed.

For further broader reading on how your business trades out of the pandemic. Please view business recovery coming out of the COVIDpandemic.

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