The remaining temporary insolvency measures brought in under the Corporate Insolvency and Governance Act 2020 (CIGA 2020) expired on 31 March 2022.
This means that, among other things, the minimum threshold of £10,000 for liquidation petitions will no longer apply and petitions can again be raised on the basis of a statutory demand relating to a debt of at least £750. Additionally, the regulations provided that it was necessary to serve a Schedule 10 notice on a debtor 21 days before issuing a winding-up petition. This condition will no longer apply.
By way of background, the temporary measures were introduced initially by CIGA 2020 in June 2020 to provide struggling companies with greater protection in light of the ongoing COVID-19 pandemic and the resultant financial hardships faced by many businesses. The measures were most relevant in relation to the retail, hospitality and tourism sectors whih were hit particularly hard during the height of the pandemic.
In September 2021, the Government provided for new regulations to replace some of the temporary measures put in place by CIGA 2020, acknowledging that additional help over a more prolonged period was necessary during the unprecedented times. The aim of these new restrictions was to help smaller companies get back on their feet and to give them more time to trade their way back to financial health without the threat of winding up proceedings from creditors.
The restrictions on insolvency proceedings have now been removed and the insolvency regime for creditors pursuing debts will return to its pre-pandemic position. It should also be noted that in Scotland, restrictions in relation to COVID-19 related arrears of commercial rent have also been lifted as of 31 March 2022.
How can we help?
If you have any queries in relation to the end of the temporary restrictions under the Corporate Insolvency and Governance Act 2020 or any other insolvency or debt recovery queries, please contact Leon Breakey or another member of our Commercial Dispute Resolution team.
This article was co-written by Clare Tuohy, Trainee Solicitor.
