Insolvency changes see a return to pre-pandemic rules, well almost….. until 2022!
The publication of the Corporate Insolvency and Governance Act 2020 (Coronavirus) (Amendment of Schedule 10) Regulations 2021 (SI 2021/1029) confirms changes to the insolvency regime concerning statutory demands and substituted requirements for commercial insolvency.
The revised Schedule lifts the current restrictions on statutory demands but imposes new requirements for winding-up petitions. The restrictions on petitions where the debt owed is under £10,000 or is for commercial rent remain. The new Schedule 10 sets out conditions that must be met for presenting a winding-up petition. The principal consequences of these are that during the relevant period, which will expire on 31 March 2022:
• A creditor may not present a winding-up petition in respect of commercial rent that is unpaid because of a financial effect of coronavirus. This provision supports the extended moratorium on forfeiture for commercial tenants;
• A creditor may not present a winding-up petition if it is for a debt or debts totalling less than £10,000;
• A creditor may not present a winding-up petition unless written notice (a Schedule 10 Notice) has been delivered to the debtor seeking the company’s proposals for payment of the debt and the company has not made a proposal that is to the creditor’s satisfaction within 21 days. A creditor may, however, apply to court for an order that they do not need to deliver a Schedule 10 Notice or give the debtor 21 days to make a satisfactory proposal;
• A creditor will again be able to rely on non-payment of a statutory demand to evidence a debtor’s inability to pay their debts provided the other conditions are met.
Source: The Corporate Insolvency and Governance Act 2020 (Coronavirus) (Amendment of Schedule 10) Regulations 2021 (SI 2021/1029) and explanatory memorandum.
If you require assistance with debt recovery or insolvency or if you would like further information, call Matthew Blood on 02476 641642.