The Corporate Insolvency & Governance Act 2020 came into force on 26 June 2020 to support businesses affected by COVID-19. One of the main provisions was in relation to statutory demands and winding up petitions.
The Act currently provides that creditors cannot proceed with a winding up petition on account of an outstanding statutory demand served between 1 March 2020 and 30 June 2021. The creditor can only present a petition for the winding up of a company if it has a reasonable belief that the company’s business had not been adversely affected by COVID-19 or that it would not have been able to meet the demand, regardless of the effects of the pandemic. This is a difficult test to meet.
It has just been announced that regulations are set to be laid that will mean this restriction on statutory demands and winding up petitions will remain for a further three months until 30 September 2021. This news will no doubt be welcomed by debtors, but creditors will not be so positive. They may well be finding it increasingly difficult to manage if their income is affected.
How can we help?
If relations are breaking down and there is no scope of reaching agreement on sums due, there are still some steps that creditors can take to try to protect their position. Please do get in touch with Leon Breakey or another member of our specialist Commercial Dispute Resolution team to discuss your particular circumstances.