The option to present a winding up petition for the non-payment of debt temporarily returns from 1 October 2021, albeit with a modified approach.
The current restrictions contained in the Corporate Insolvency and Governance Act 2020 regarding winding up petitions will be partially lifted from 1 October 2021. The new measures will permit creditors to present winding up petitions against companies for unpaid debts subject to certain restrictions, being:
- the debt threshold for presenting a winding up petition has increased from £750 to £10,000 (this can be a cumulative total arising from multiple debts to that creditor)
- the creditor must request and give the debtor company 21 days to provide a debt repayment proposal before the creditor can present the winding up petition
- winding up petitions still cannot be presented in respect of unpaid commercial rent
The repayment request notice must be delivered to the debtor company's registered address. The winding up petition will also need to include a statement confirming that a repayment request notice was delivered and that the 21 day period passed without either a repayment proposal or an acceptable repayment proposal. If the creditor rejects the debtor company's repayment proposal, they must include the reasons for doing so in the winding up petition
The Court has the power on application by the creditor to both waive the requirement for the creditor to request a debt repayment proposal from the debtor company and shorten the 21 day response period. This updated approach to winding up petitions for non-payment of debts will remain in place until 31 March 2022.
Though the increase in the debt threshold represents a significant departure from the pre Covid-19 approach, the repayment request notice is, for all intents and purposes, a statutory demand in a different guise. Further, the exclusion of commercial rent arrears is not unexpected given the Government's intention to introduce an arbitration system for commercial rent arrears that arose during the Covid-19 period.
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.