On 29th September 2021 the Corporate Insolvency and Governance Act 2020 (Coronavirus) (Amendment of Schedule 11) Regulations (Northern Ireland) 2021 came into force, aligning Northern Ireland with the position in Great Britain in respect of the easing of restrictions on winding up proceedings imposed by the Corporate Insolvency and Governance Act 2020.
Until 30 September 2021, Creditors were unable to present Winding Up Petitions against debtor companies based on statutory demands served after 1 March 2020. Furthermore, Creditors were unable to present Petitions to the Court between 1 March 2020 – 30 September 2021 based on a debtor company’s inability to pay its debts (unless a Creditor could prove that COVID-19 did not have a financial effect or that the debtor company would have been unable to pay its debts even if COVID-19 had a financial effect). This temporary modification to insolvency legislation was designed to protect companies affected by the lockdown and/or by the restrictions introduced to deal with the pandemic.
The new Regulations do not remove the restrictions placed on Creditors in respect of issuing Statutory Demands and Petitions but instead introduce new tapering measures from 1 October 2021 until 31 March 2022, which include:
- Creditors must provide written notice to the debtor company seeking satisfactory proposals to repay the debt and allow the debtor company a 21-day period within which to respond;
- It will only be possible to present a Winding Up Petition if the debt is at least £10,000 (the normal threshold is £750);
- A Petition cannot be brought in respect of a commercial rent debt (the moratorium on forfeiture of commercial leases has been extended until 31 March 2022) unless the creditor can prove that the debt is not related to the pandemic.
While Creditors may welcome this latest development, Debtors will understandably be anxious, particularly as many may continue to be affected financially by the ongoing pandemic and if they are not already doing so, will have to engage with their major creditors.
It is important to note that in Northern Ireland the Bankruptcy & Companies Court has yet to confirm that it will begin to accept new Petitions, with the Court currently only dealing with adjourned Bankruptcy and Winding Up Petitions from the period March – June 2020. Further developments are anticipated.
Should you require any further information or advice on any issues arising from the above or insolvency matters generally, please contact the Insolvency & Dispute Resolution Unit:
Tel: 028 9024 5034
Copyright 2021 Elliott Duffy Garrett
Every care has been taken in the preparation of this bulletin; readers are advised however to seek legal advice in relation to specific issues.