The temporary restrictions on the winding up of companies were lifted on 31 March 2022. This means the legal regime governing insolvency has returned to its pre-pandemic approach.

The pre-31 March position 

As we reported in October last year, the UK government imposed new temporary measures aimed to protect companies from aggressive creditors and established new requirements for winding-up. These measures included giving notice to a company and providing it with 21 days to respond with proposals for payment, the debt owed had to be a minimum of £10,000 and a restriction on presenting petitions for commercial rent, unless the non-payment of the debt was unrelated to the pandemic.

The position now

From 1 April, creditors are able to issue winding-up petitions against debtors who have not paid the sums they owe using the procedures under the pre-pandemic rules. There is no need to give notice and the debt can now be £750 (or more), considerably lower than the temporary threshold of £10,000.

Creditors seeking to recover commercial rent arrears will have to consider whether they are 'protected rent debts' under the new Commercial Rent (Coronavirus) Act which came into force on 25 March 2022. See our recent update here on the options now open to landlords for recovering commercial rent arrears.

Key takeaways 

As creditors' powers to pursue unpaid debts return to normal, more businesses will become vulnerable to creditor action and we expect to see the numbers of winding up petitions increase. Directors of companies in financial difficulties should seek advice on the options available to them to restructure their debts and avoid insolvency proceedings.

Find out more

To discuss the issues raised in more detail, please reach out to a member of our Restructuring & Insolvency team.