What happens with winding-up petitions has changed in the wake of the coronavirus pandemic. Normally, a winding-up petition (WUP) is one of the most severe methods in which a creditor can try to reclaim the money they’re owed.
Can my creditors still issue a Winding-up Petition?
Under normal circumstances, if your company owes a creditor £750 or more, they could issue a winding-up petition, which if left unpaid or unchallenged can become a winding-up order. Your banks freeze your accounts, making trading impossible.More on winding-up petitions
With COVID-19, The Government had suspended the issuing of winding-up petitions and statutory demands after 27th April 2020. This suspension was due to expire on 30th September but was extended to 31st December, and again to 31st March 2021.
Is there protection for my business?
In March, the Government introduced the Coronavirus Act 2020, which included several protections for businesses. One of these protections was a condition that commercial tenants unable to pay their rent due to coronavirus-related debt wouldn’t face eviction.
Additionally, according to the Corporate Insolvency and Governance Act 2020, a creditor should not pursue a winding-up petition unless they can fulfil the ‘Coronavirus condition’.
The ‘Coronavirus condition’ means that before submitting a winding-up petition, a creditor should have reasonable grounds to believe, either:
- COVID-19 has not affected the company financially.
- The debt would still apply even if COVID-19 had not affected the company financially.
Can my creditors still send a CCJ?
If your company owes a creditor money, they can still issue a County Court Judgement (CCJ) for that amount. The CCJ must be paid before the deadline listed in the judgement; usually 30 days after its issuing, to avoid it appearing on your credit file.
Bailiff visits were suspended during the first lockdown; however, they’ve been reinstated since the end of August. Bailiffs can visit and enter premises if the company has a CCJ against them.How to deal with a CCJ
While your creditors can still take action to recover debts you owe them, government legislation to combat coronavirus’ effects mean winding-up petitions and statutory demands cannot be issued until after 31st March 2021. Creditors can only do so if they can convince the court coronavirus has not affected the company financially, and the debt would still apply without it.
How we can help
If your company is struggling with debt, coronavirus-related or not, you should act sooner rather than later for the best chance of saving your business. Speak to our initial advisors for free, impartial advice with no obligation. Our team of insolvency practitioners have years of experience and can help guide you to the solution best-fitting for your business and its circumstances.
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