The Insolvency Service have confirmed that the Covid-19 restrictions on winding up petitions ended on 31 March 2022. This is under The Corporate Insolvency and Governance Act 2020. These restrictions ended on 31 March 2022. What does this mean?
What is a Winding-Up Petition?
A winding-up petition is a legal action taken in a court for an order to liquidate a company. The most common type of winding up petition is by a creditor. A creditors petition amounts to a request by a creditor for the court to wind up/ liquidate the company on the basis that the debtor company cannot pay its debts. A failure to satisfy the statutory demand means that the company is deemed insolvent so a creditor does not need to prove insolvency.
Position from 1 April 2022
The removal of the temporary restrictions means a return to the pre-pandemic position:
- Creditors will no longer be required to demonstrate that non-payment (the debt) is unrelated to the effects of Covid-19.
- The debt threshold for businesses to issue a winding up petition has reverted to at least £750. This was £10,000.
- There isn’t a requirement to serve the Section 10 Notice and provide a debtor company with 21 days to present a reasonable repayment proposal.
When presenting a winding up petition restrictions on commercial landlords remain. This relates to commercial rent arrears in respect of “ring-fenced” debt incurred during specific lockdown periods dependant on the debtor company’s business (Commercial Rent (Coronavirus) Act 2022).
Notwithstanding the above, a winding up petition should be a last resort. We recommend, where possible, creditors seek to agree repayment of debts.
If you require guidance or advice in respect of insolvency matters, please contact our team on 0113 266 0735.