The debt threshold for a winding up petition will be temporarily increased in wake of the coronavirus pandemic, it has been announced.
It comes as temporary measures preventing businesses from entering insolvency are phased out next month.
According to the Insolvency Service, companies in financial distress as a result of Covid-19 disruption have been protected from creditor action since June last year.
Under the Corporate Insolvency and Governance Act 2020, creditors have been unable to initiate aggressive enforcement action, such as statutory demands and winding-up petitions, when debts are Covid-related.
But now that coronavirus restrictions have been lifted, the measures protecting businesses from insolvency will be phased out from 01 October and replaced by a new set of rules until 31 March 2022.
The regulator said the new legislation will:
The new measures will only apply to small businesses, however. This includes high street firms and those “hit hardest during the pandemic”, such as the hospitality and leisure sector.
Commenting on the measures, Business Minister Lord Callanan said: “The success of our vaccine rollout means we are seeing life and the economy returning to normal with a strong rebound, and the time is right to lift the insolvency restrictions that were needed during the pandemic.
“At the same time, we know many smaller businesses are rebuilding their balance sheets and reserves, and some will need more time to get back on their feet. These new measures protections will help them to do that.”
According to a recent survey, eight in 10 small and medium-sized enterprises (SMEs) say their revenue had declined during the pandemic, while one in four are concerned about defaulting on loans. A similar number doubt their ability to sustain their supply chains.
For help and advice with related matters, please get in touch with our team today.
“Richard Anthony case study – Terry Lewis – Jaques Samuel Pianos Widely considered to be London’s leading piano retailer, Jaques Samuel Pianos has grown considerably from its humble beginnings in the front room of Mr Samuel’s home in Notting Hill. They are now internationally recognised and have provided pianos for high-profile clients like Queen and […]”
Terry Lewis – Jaques Samuel Pianos
“Richard Anthony: ‘a super-star firm’ MT Finance is a property finance lender, specialising in bridging loans and auction finance. They assist numerous property professionals, business owners, and individuals with their finance requirements and specialise in short-term asset-based lending. Founder and Director, Tomer Aboody, knew that as an asset-based lender, the business would require an expert […]”
Tomer Aboody – MT Finance
“A family fairground success story The Botton family have been running a traditional fairground, arcade and amusement park in the heart of Skegness since taking over the Pleasure Beach in 1965. Jim, the Director of the company, took over from his father and now heads day-to-day activities and administration. He said: “The Pleasure Beach is […]”
Jim Botton – Pleasure Beach (Skegness)