As of April 1, 2022, any remaining temporary insolvency measures will be lifted. The insolvency regime will return to its way of work, before the COVID-19 pandemic.
How does this impact me and my business?
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 measures (wrongful trading) expired either by the end of June or September, 2021.
However, the restrictions on winding up companies (with a revised criteria required to be met before permitting a winding up petition) were extended until 31 March 2022. The UK Government has shared that this restriction will not extend any further, hence all restrictions will be removed.
So, in effect if you owe any individual creditor less than £10k then they can now issue a winding up petition on your company. As issuing a winding up petition is an expensive process it will be those with more substantial debts but it is possible for other creditors to join the petition.
If you receive threats of a winding up petition or have had threats in the past then you must act.
If a creditor moves to wind your company up, they are usually serious in their intent to recover the money it is owed and/or put the company out of business. In the past (read our rescue stories), we have managed to stop a winding up order by proposing a company voluntary arrangement (CVA) and/or seeking an adjournment of the petition. But don't let it get to this stage as it makes the whole process of saving your company more difficult and expensive.
What about unpaid rent?
It should be noted that the government has now passed the Commercial Rent (Coronavirus) Act 2022 which in effect removes all restrictions on landlords to recover their rent arrears. However, companies that were forced to close due to the pandemic ie restaurants, pubs and gyms are eligible to enter into a legally binding arbitration process where they have not been able to reach agreement. This will resolve disputes about certain pandemic-related rent debt and should help the market return to normal as quickly as possible.
The window to apply for arbitration will be six months from the date legislation comes into force. Arbitrators may award a reduction of protected rent debt and/or time to pay, with a maximum period to repay of 24 months.