The Government has announced that the temporary insolvency measures brought in during the Coronavirus Pandemic are to be phased out from 1 October 2021. The temporary insolvency measures, contained in the Corporate Insolvency and Governance Act 2020, are to be replaced by new legislation and new protections for businesses. The proposed new protections will be, the announcement says, '...targeted measures to support small business and commercial tenants'.
These changes were to be brought into force in England by the 'Corporate Insolvency and Governance Act 2020 (Coronavirus) (Amendment of Schedule 10) Regulations 2021' (SI 2021/1029), but those contained an error and were repealed before coming into force. The relevant rules, issued on 27.9.21, are: Corporate Insolvency and Governance Act 2020 (Coronavirus) (Amendment of Schedule 10) (No. 2) Regulations (SI 2021/1091).
The announcement on 9 September 2021 provided:
'New measures will be brought in to help smaller companies get back on their feet to give them more time to trade their way back to financial health before creditors can take action to wind them up. This will particularly benefit high streets, and the hospitality and leisure sectors, which were hit hardest during the pandemic.
The new legislation will:
1. Protect businesses from creditors insisting on repayment of relatively small debts by temporarily raising the current debt threshold for a winding up petition to £10,000 or more.
2. Require creditors to seek proposals for payment from a debtor business, giving them 21 days for a response before they can proceed with winding up action.
These measures will be in force until 31 March 2022.'
As to commercial tenants, the announcement was:
'Businesses should pay contractual rents where they are able to do so. However, the existing restrictions will remain on commercial landlords from presenting winding up petitions against limited companies to repay commercial rent arrears built up during the pandemic.
Continuing the restriction on winding up, in respect of commercial rent only, supports the announcement on 16 June that commercial tenants will continue to be protected from eviction until 31 March 2022, whilst the government implements a rent arbitration scheme to deal with commercial rent debts accrued during the pandemic.'
The announcement, released 9 September 2021, can be read here.
SIMON HILL © 2021
33 BEDFORD ROW
NOTICE: This article is provided free of charge for information purposes only; it does not constitute legal advice and should not be relied on as such. No responsibility for the accuracy and/or correctness of the information and commentary set out in the article, or for any consequences of relying on it, is assumed or accepted by any member of Chambers or by Chambers as a whole.