"We're on the road back to normality" went the refrain in the Government's recent ' Living with Covid' announcement, scrapping self-isolation and testing. In this article  William Angas and  Ben Ashworth from our Dispute Resolution team discuss the extent to which normality will return when the current temporary restrictions on issuing winding-up petitions end on 31 March 2022.

What are the present requirements to issuing winding-up petitions?

Since 1 October 2021, creditors have only been able to issue winding-up petitions on commercial fixed debts which exceed £10,000. This was a significant increase on the previous threshold of only £750.

Statutory Notices

Before a winding-up petition can be issued a creditor is currently required to serve the debtor with a Statutory Notice. Like a Statutory Demand, it requires the creditor to provide details of their debt but, in addition, the creditor must also state their intention to present a winding-up petition if no reasonable proposal for payment of the debt is made by the debtor within 21 days of the date of service of the Notice.

As the Statutory Notice gives a debtor 21 days to make a proposal to settle a debt, many creditors have adopted the practice of serving a Notice concurrently with a Statutory Demand, which also provides the debtor 21 days to pay or otherwise settle a debt. This can reduce the risk of the debtor applying to the court for an injunction to prevent the creditor from presenting a winding-up petition.

If the current temporary restrictions end on 31 March, what then?

If, as expected, the current temporary restrictions on issuing winding-up petitions do end on 31 March 2022, then there should be a return to the lower limit and creditors would be able to present a winding-up petition for an undisputed, fixed debt in excess of £750.

The requirement to serve a Statutory Notice inviting the debtor to put forward proposals for payment of the debt will also (hopefully) be removed. If this happens then, as was the case before the restrictions were implemented, if a creditor can prove to the satisfaction of the Court that the debtor is unable to pay its debts as they fall due, then it should be possible to issue a winding up petition without first serving a Statutory Demand, thus avoiding having to wait 21 days before issuing the petition.

What do we expect to happen?

There are a number of reasons why the Government may want to keep some or all of the present restrictions in place not least of which is to avoid the Courts from being overwhelmed with petitions. Given this, it is possible that the Government will increase the rather low limit of £750 and may even keep the present £10,000 threshold in place. If this is the case, our message to creditors is not to worry; there are various ways of enforcing debts below the winding-up petition threshold which are just as effective.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.