From October 1, temporary measures provided during the pandemic to support businesses from insolvency will end.
The measures have protected companies in financial distress from creditor action since June 2020, through the Corporate Insolvency and Governance Act. This was to ensure businesses affected by lockdown restrictions avoided insolvency.
But as normal trading economy returns, these creditor action restrictions will be lifted. Instead, new measures will be presented, to help smaller businesses bounce back and allow more time to become financially stable.
This is particularly beneficial for high streets, leisure and hospitality factors who were hit the hardest during the covid19 pandemic.
The new legislation will:
- Protect business from creditors insisting on repayments of small debts by temporarily raising current debt thresholds for a winding up petition of 10,000 or more.
- Require creditors to seek proposals for repayment from a debtor business, allowing 21 days for a response before they proceed with winding up action.
These new measures will remain in place until March 31 2022.