Government throws new lifeline to small businesses
Emergency measures introduced by the Government to protect companies during the pandemic have now made way for new, temporary protections for those still recovering financially.
These are aimed at helping smaller companies and commercial tenants to recover before creditors can start winding-up procedures.
Ministers hope this will offer support to high streets, plus hard-hit sectors including hospitality and leisure as more normal trading conditions continue to return.
The legislation that ceased on October 1st was laid down by the Corporate Insolvency and Governance Act 2020 and ensured viable businesses were not forced into insolvency during successive lockdowns.
The new legislation remains in force until March 31st 2022, covering England, Scotland and Wales. These measures will:
- Raise the current debt threshold for a winding-up petition to £10,000 or more, protecting small businesses from creditors insisting on the payment of relatively small debts
- Require creditors to seek repayment proposals from debtor businesses, allowing them 21 days to respond before winding-up action can commence.
In the meantime, the Government has emphasised that businesses should continue to pay contractual rents wherever possible. Restrictions remain in place to prevent commercial landlords from presenting winding-up petitions against limited companies to recover rent arrears.
This supports an earlier announcement that commercial tenants will continue to be protected from eviction until March 31st, 2022. These timescales will enable the Government to implement a rent arbitration scheme to deal with commercial rent debt, accrued during the pandemic.
Licensed Insolvency Practitioner and CBBR Director Chris Brooksbank said: "Everyone here supports this proactive approach aimed at keeping viable businesses afloat and we are available to offer clarity and more detail as required.
"Our experienced team can provide guidance concerning insolvency, bankruptcy and restructuring. Please get in touch for an initial, no -obligation chat. We look forward to hearing from you."
