The UK Government has confirmed that temporary measures brought in to support businesses from insolvency during the pandemic will be phased out from 1 October.
The United Kingdom’s Insolvency Service recently announced that the temporary support businesses from insolvency during the pandemic will be phased out from 1 October and new measures introduced.
In June 2020, the Corporate Insolvency and Governance Act 2020 was introduced to protect companies in financial distress as a result of the pandemic to protect them from creditor action to safeguard viable businesses affected by the restrictions on trading during the lockdown periods and were not forced into unnecessary insolvency.
“As the economy returns to normal trading conditions, the restrictions on creditor actions will be lifted.” The Insolvency Service said
New measures are being introduced by the UK government to enable smaller companies to give them time to trade their way back to financial health before creditors can take action to wind them up. These measures will particularly benefit the hardest hit high streets, and the hospitality and leisure sectors.
The new, yet to be published, legislation is intended to protect businesses from creditors by temporarily raising the current debt threshold for a winding up petition from £750 to £10,000 or more. The legislation will also require creditors to seek proposals for payment from a debtor business, giving them 21 days for a response before they can proceed with winding up action. These measures will be in force until 31 March 2022.
The existing restrictions will remain on commercial landlords from presenting winding up petitions against limited companies to repay commercial rent arrears built up during the pandemic.
The Business Minister Lord Callanan said: “Businesses should pay contractual rents where they are able to do so.” Adding “commercial tenants will continue to be protected from eviction until 31 March 2022, whilst the government implements a rent arbitration scheme to deal with commercial rent debts accrued during the pandemic.”
