On 30 June 2021 the suspension on the restrictions on use of statutory demands and winding up petitions will finally come to an end.
The Corporate Insolvency and Governance Act 2020 introduced the suspension to prevent creditors from presenting winding up petitions where the company’s inability to pay its debt was due to COVID-19. In fact a petition based on a statutory demand served during the moratorium period was could not be presented even if the debts would have occurred without COVID-19, such was the scope of the government’s rescue plan.
Companies that were struggling due to the pandemic were given breathing space but as business and trade has now started to get back to life these debts, even if caused by the pandemic, will need to be paid otherwise creditors will now be able to issue a statutory demand and petition for winding up.
It is anticipated that there will be a spike in such petitions as many creditors will be holding on to debt with statutory demands ready to go. If the last 12 months saw the lowest number of petitions for decades we can expect the next 12 months to be the reverse.
This blog was written by: Allan Kornbluth
DISCLAIMER: Please note that this post sets out the general position under the general law. It should not be acted upon in any specific circumstances without taking specific legal advice as to those circumstances. Also, it should not be relied upon, acted upon or treated as a substitute for specific advice relevant to particular circumstances. If you do require specific advice please contact us for assistance.