Corporate Insolvency and Governance Act 2020

Background

The government introduced the Corporate Insolvency and Governance Act 2020 to protect companies from failure during the pandemic. This resulted in insolvencies only increasing by 13% in July 2021 compared to July 2020.

On 1st of October 2021 furlough will end, and there will also be an end to some of the temporary restrictions from the Corporate Insolvency and Governance Act 2020.

The consequence of the Corporate Insolvency and Governance Act 2020 has made it challenging for creditors to issue winding up petitions unless the creditor could prove the debtor had not been affected financially by the Covid 19 pandemic, or the debtor could not have paid the debt in any case despite the pandemic.

Change from 1 October 2021

Regardless of the Covid 19 effect on a debtor company, a creditor will be able to issue a statutory demand, and if the debtor fails to pay within 21 days a winding-up petition can be issued.

1. The debt is due and is not for commercial rent arrears, service charges or anything due under the business lease.
2. A statutory demand has been served on the debtor company by the creditor.
3. The 21 days notice from the statutory demand has expired and the debtor company has not made a suitable repayment agreement with the creditor.
4. The debt owed by the debtor company is at least £10K

Whilst this is still not good news for commercial landlords until the end of March 2022 it is at least a move in the right direction. It could of course be sooner if new government legislation for pandemic arrears comes out before then.

Commercial landlords still have a limited use of Commercial Rent Arrears Recovery (CRAR) where the rent owed amounts to over 554 days and they can of course issue a judgment which can be enforced by a Writ of Control.

You will note the restriction on the threshold for a winding up petition has risen from £750 to £10K to help protect small businesses.

Our understanding however is that this only applies where a creditor serves a statutory demand and relies on that for their grounds for issuing the winding-up petition.

Issuing a Winding Up petition for debts of less than £10K

A creditor may well be able to use a certificate of nulla bona as evidence of an unsatisfied judgment signed by an HCEO showing a debtor companies insolvency despite execution of a writ of control section 268(1)(b) of the insolvency Act 1986.

At Frank G Whitworth we can help transfer up your County Court judgment and enforce the same across England and Wales. See here for details on our High Court Enforcement Service under the supervision of our three Authorised High Court Enforcement Officers.

I have a question

Telephone or email Frank G Whitworth for advice.

About the author

This article was written by Andy Coates, Authorised High Court Enforcement Officer and full member of The High Court Enforcement Officers Association, MABI, MCEAA, and Current Operations Director of Frank G Whitworth.

Andy has a Level 4 diploma in High Court Enforcement, and over twenty five years of experience in the bailiff and investigation industry. He is the Honorary President of the CEAA, and a former governing council member of both CIVEA and ABI.