Restrictions on winding up petitions, which raised the debt threshold to £10,000 or more and required creditors to give debtor businesses 21 days to respond to alternative proposals before seeking a winding up order have now been lifted.
The measures were introduced in October 2021, replacing previous temporary changes that had been in place since early in the pandemic.
When announcing the measures, the Insolvency Service stated they would “be in force until 31st March 2022″, but many temporary arrangements put in place to respond to the impact of Covid were extended beyond their original end dates. In this case, it seems the government has decided circumstances are close enough to ‘normality’ again to end the restrictions as planned.
It is difficult to tell what effect the changes will have on insolvencies. While the debt threshold was raised significantly from £750 to £10,000, it only applied to single debts, meaning the threshold could still be reached through the sum of multiple debts owed to one creditor or of debts owed to a group of creditors. The restriction still offered added protection to many businesses, of course, especially smaller companies which were more likely to have been impacted by Covid.
Whatever the impact on the insolvency market, the changes are the latest indication from the government that it is returning to ‘business as usual’.
In a related announcement, Business Minister Paul Scully confirmed that the general moratorium on commercial evictions has ended and “a new law is now in place to help resolve certain remianing commerical rent debts accrued because of the pandemic”.
The Commercial Rent (Coronavirus) Act 2022 makes available a legally binding arbitration process to commercial landlords and tenants who have not reached an agreement. The law applies to businesses forced to close, or whose activities were heavily restricted, as part of the government’s Covid restrictions. It protects eligible firms from eviction for a further six months.
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