All change – the temporary insolvency measures are lifted

In June 2020 the government introduced a moratorium on insolvency measures due to the COVID pandemic, as reported in our previous updates which can be accessed here. The moratorium was replaced with further limited temporary measures in October 2021.  Details of what the lifting of the temporary measures mean are set out below.

It has been confirmed that the temporary insolvency measures will not be extended and will expire on 31 March 2022 allowing creditors to once again commence winding up proceedings within the pre-pandemic provision of the Insolvency Act 1986.

This means, amongst other things, that it will no longer be necessary to serve a Schedule 10 notice on a debtor 21 days before issuing a winding up petition and that a creditor will once again be able to present a winding up petition for debts over £750 (£10,000 under the temporary measures).

However, creditors should be aware that the restrictions on winding up and bankruptcy petitions concerning COVID related arrears of commercial rent continue to apply under the Commercial Rent (Coronavirus) Act 2022 – further details can be found here.

We are sure that the expiry of the remaining insolvency measures will be welcomed by creditors who are owed undisputed debts under £10,000, especially as some practitioners had wondered if the £10,000 limit would become permanent.

Despite the lifting of these restrictions, creditors will need to be prepared for lengthy delays in obtaining winding up orders as it is expected the courts will be inundated with petitions being issued from 1 April 2022 onwards.

Please contact our experts if your organisation needs advice in relation to the recovery of monies owed.