Insolvency Restrictions Updated
Covid related restrictions on the use of insolvency against companies are being updated on 1st October 2021.
The new regime will provide that the following conditions have to be met for a creditor to present a winding up petition:
1. The debt which the petition relates to must be a liquidated sum and cannot be excluded. Excluded debt’s include rent and general tenant associated costs. This means commercial landlords cannot present a petition based upon rent arrears unless they can prove the debt was not caused by the effects of coronavirus.
2. The total debt must amount to £10,000.00 or more.
3. A 21 day notice must be served upon the debtor company. A creditor must then wait 21 days for repayment proposals. The notice must include:
– identification details for the company;
– the name and address of the creditor;
– the amount of the debt and the way in which it arises;
– the date of the notice;
– a statement that the creditor is seeking the company’s proposals for the payment of the debt; and,
– a statement that if no proposal to the creditor’s satisfaction is made within the period of 21 days beginning with the date on which the notice is delivered, the creditor intends to present a petition to the court for the winding-up of the company.
The notice must be delivered to the debtor company’s registered office. If this is not possible as the company is unregistered, has no registered office etc then it should be delivered to the company’s last known principal place of business or a secretary or director or manager of the company.
Once the 21-day period has elapsed, in the absence of repayment proposals a creditor can then proceed to present a winding up petition if the debt is over £10,000.00.
If the debtor company responds within the 21 days with unsatisfactory repayment proposals the creditor must detail to the Court their justification for the proposals being unsatisfactory. The Court will use its discretion when deciding on whether to allow the petition to be heard.