Covid restrictions on corporate insolvency action to end
We have been continuing to monitor the Corporate Insolvency and Governance Act 2020 (the “Act”) closely since it came into effect on 26 June 2020. The Act imposed a number of restrictions on insolvency action, designed to give companies breathing space during the Covid-19 pandemic.
Under the Act there was a bar on creditor statutory demands served between 1 March 2020 and 30 September 2021 being used as a basis for presenting a winding up petition on or after 27 April 2020. This restriction was lifted on 30 September 2021.
Additional restrictions on winding-up petitions presented between 1 October 2021 and 31 March 2022 - where the debt owed was under £10,000 or was for commercial rent - are now also nearing an end. As of 31 March 2022, creditors will be able to rely on non-payment of a statutory demand where the undisputed debt and/or unpaid commercial rent is in excess of £750 to evidence a corporate debtor's inability to pay their debts in support of a winding up petition.
Articles are intended as an introduction to the topic and do not constitute legal advice.