Amongst the many trials and tribulations that currently beset business owners they now have to contend with the ending of the temporary insolvency restrictions, which protected many of them from their creditors at the outbreak of the pandemic, writes Stephen Wade, a Partner specialising in insolvency and debt recovery in solicitors Bishop & Sewell’s Dispute Resolution team.
The Government has announced that the temporary restrictions on winding-up petitions found in Schedule 10 of the Corporate Insolvency and Governance Act 2020 (CIGA 2020) were phased out from 1 October 2021.
Creditors have been unable to pursue companies in financial distress as a result of the pandemic since June 2020. It is no longer necessary to consider the financial effect of the pandemic on the company as the restrictions have been eased.
However, new measures in place from 1 October, 2021 until 31 March, 2022 are as follows:
1) The current debt threshold to issue a winding-up petition against a company has been increased from £750.00 to £10,000.00 or more; and
2) Creditors are required to seek proposals for payment from a debtor business, giving them 21 days for a response before proceeding with a winding-up petition.
We have also seen the ending of the government’s support of the furlough scheme this month, which adds another complicating dimension for many business owners.
Whether you are seeking redress from slow payers, or are looking at options to protect yourself from creditors we can help.
Headlines such as this recently in CityAM ‘End of furlough could be the final catalyst for disaster’ do little to calm fraying nerves. But the key word in that headline is ‘could’.
It need not happen, although seeking professional support as soon as possible ‘will’ make all the difference.
About Bishop & Sewell LLP
Bishop & Sewell is a long-established, full service Central London law firm – with an international reach – specialising in Personal, Property and Commercial legal matters. To learn more, visit www.bishopandsewell.co.uk