Partial lift of temporary insolvency measures

Temporary measures brought in to support businesses from insolvency during the Covid pandemic pursuant to the Corporate Insolvency and Governance Act 2020 will be phased out from 1 October 2021.

Under the current temporary measures, a winding up petition cannot be presented against a debtor company unless a creditor can show the Covid pandemic is not a reason that a debtor cannot pay its debt. This is hard to prove and has prevented many creditors from enforcing their debts via the presentation of winding up petitions.

From 1 October 2021 to 31 March 2022, the winding up petition debt threshold will be increased to debts of £10,000 or more. Furthermore, before presenting any winding up petition, a creditor must seek proposals for payment from a debtor first and give the debtor 21 days to respond before proceeding to present a winding up petition.

This means that a creditor owed a debt of more than £10,000 can petition to wind up a debtor again provided the 21 day period is given beforehand.
A creditor with a debt of less than £10,000 will need to consider other enforcement methods such as bringing a county court claims against a debtor.

If you are owed money by a company, please get in touch with our debt recovery specialists Raman Dhillon and Jack Austin-King.