Insolvency regulation changes announced - from 1st October 2021

Sonya Stevenson


Insolvency regulation changes announced - from 1st October 2021

The government has announced that temporary measures brought in to support businesses from insolvency during the pandemic will be phased out from 1 October. Companies in financial distress as a result of the pandemic have been protected from creditor action since June 2020. As the economy returns to normal trading conditions, the restrictions on creditor actions will be lifted.

The good news is that new measures will be brought in to help smaller 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 winding up action.

These measures will be in force until 31 March 2022.

Whilst this news may bring comfort to a lot of struggling businesses who have been trying to keep afloat for the last year, sadly not all businesses will be able to benefit and therefore professional advice should be taken as soon as possible, so that directors do not fall fowl of wrongful trading, which could have a personal cost to the directors of the company.

 Click here to see Sonya's profile and contact details.

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