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Coronavirus and winding-up petitions

Coronavirus and winding-up petitions

Oct 11th, 2021

David Tonge, Partner

Amendments to The Corporate Insolvency and Governance Act 2020 (Coronavirus) Regulations 2021 came into force on 29 September 2021.

The amendments represent a relaxation of the restrictions placed upon the presentation of winding up petitions but are far from a return to the pre-Covid position.

The new provisions do not contain any restrictions on statutory demands but impose four conditions during the “Relevant Period”, being 1 October 2021 to 31 March 2022, on the presentation of winding up petitions by a creditor on the grounds of inability to pay debts.

The conditions (the second and third of which may be varied by the Court on the creditor’s application) are that:

  • The debt is liquidated and has fallen due for payment;

  • The creditor must have delivered a written notice to the debtor company which amongst others contains statements that (a) the creditor is seeking proposals for payment of the debt and (b) if no proposal to the creditor’s satisfaction is made within the period of 21 days beginning with the date on which the notice is delivered, the creditor intends to present a petition to the court for the winding-up of the company;

  • By the end of the period of 21 days beginning with the day on which the written notice was given, the company has not made a proposal for the payment of the debt that is to the creditor’s satisfaction; and

  • The debt (or sum of debts where the petition is to be presented by more than one creditor) is £10,000 or more.

However, the above offers little for landlords, as the relaxation of restrictions outlined above does not apply to an “Excluded Debt” which includes rent payable under a relevant business tenancy.

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