The end is nigh for Covid restrictions and so I hope, the relentless overuse of the term ‘unprecedented’. There is no denying that the pandemic brought about uncertain times for businesses; while some were able to successfully manage with enhanced government support such as furlough, bounce back loans and the coronavirus business interruption loan scheme, others were too highly geared to ride the storm. Many of the latter succumbed to their fate. According to the gov.uk website, creditors’ voluntary liquidations for December 2021 were 73% higher than those registered pre-pandemic in December 2019. However, there remains a small number of companies who continued to trade, despite spiralling losses and an ever-increasing deficit on the balance sheet.
Such companies may previously have taken comfort from the restrictions on statutory demands and winding up petitions introduced by Corporate Insolvency and Governance Act 2020 (CIGA); safe in the knowledge that the procedural requirements for creditors were somewhat onerous and off-putting to many. However, that is all about to change.
On 31 March 2022, the remaining CIGA restrictions are coming to an end. No longer shall there be a minimum debt of £10,000; no longer shall a schedule 10 notice need to be delivered to the debtor and subject to the passing of the Commercial Rent (Coronavirus) Bill 2021-22 in its current form, no longer shall commercial rent arrears, incurred before 21 March 2020 and/or after 18 July 2021, be considered an excluded debt for the purpose of winding up.
It is expected this shift away from debtor protection shall pave the way for several compulsory liquidations in the coming months. It will also, no doubt, result in a busy time for insolvency practitioners who will be investigating these insolvent companies and determining whether any claims exist for the benefit of creditors.
While CIGA may be coming to an end, beginning is a resulting era which will reveal the true consequences of the pandemic and the effects, good and bad, of government efforts to safeguard business.
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