Changes affecting Winding up Petitions

In March 2020 temporary restrictions on Winding up Petitions were brought in under the Corporate Insolvency and Governance Act 2020 which prevented a Creditor from presenting a Winding up Petition unless it could produce evidence that Coronavirus had not had a financial effect on a Debtor and that the Debtor would still have been unable to pay its debts even if Coronavirus had not occurred.

On 1 October 2021 those restrictions were eased and it is now possible to present a Winding up Petition on the basis that a company has failed to pay its debts irrespective of Coronavirus.  There are, however, conditions that must be met being as follows:

  • The amount due must be at least £10,000.00 (as opposed to £750.00 before Coronavirus).
  • The monies due must be for a liquidated sum that has fallen due for payment, and cannot be for rent or service charges.
  • The Creditor must send a written demand for payment to the Debtor requesting payment or repayment proposals within 21 days, and stating that in the absence of the same, an application for a Winding up Petition will be made.
  • The Creditor must wait 21 days after the demand has been received (effectively 23 days) before submitting the application.

The restrictions are due to be re-considered on 31 March 2022 when hopefully all restrictions will be lifted.

If you have any queries arising from the above, or would like to suggest a topic for a future article, please contact Chris Drinkall on 01482 337367 or christopher.drinkall@rollits.com Chris can also be followed on Twitter at @drinkall_chris and on LinkedIn

Posted on: 16/11/2021

This article is for general guidance only. It provides useful information in a concise form. Action should not be taken without obtaining specific legal advice.

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