Government announces end of Temporary Insolvency Measures from 1 October
Key Contact: Huw Roffe
Author: Hugo Hiley
Since June 2020, the Government introduced a series of emergency measures to support businesses in financial distress from the extreme economic shift as a result of the pandemic thorough the Corporate Insolvency and Governance Act 2020 (the Act).
As the economy returns to normal trading conditions, a Government press release has announced that the temporary insolvency measures contained in the Act will be phased out from 1 October 2021.
The temporary insolvency measures are to be replaced by new legalisation and new protections to help small 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.
The new legislation will:
- 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.
- Require creditors to seek proposals for payment from a debtor business, giving them 21 days for a response before they can proceed with a winding up action.
These measures will be in force until 31 March 2022 and will cover England, Scotland and Wales.
If you or your company are experiencing financial difficulty, our experienced Litigation & Dispute Resolution Team can provide guidance concerning insolvency, bankruptcy and restructuring.
