Winding Up Petitions Are Back
After many months we finally see the removal of the last of the government’s pandemic business support measures which could provide an immediate threat and challenge to several companies.
All the remaining restrictions on winding up petitions have been lifted which means that creditors can bring them against a business for any outstanding debts over £750 that remain unpaid.
And as if this wasn’t a problem then another protection for commercial tenants is being removed too.
A notice period requiring 14 weeks notice to be given by landlords before eviction proceedings for either unpaid rent arrears or historic rent debts that haven’t been paid has also been lifted meaning they can be brought about even earlier.
The Insolvency Service confirms that compulsory liquidations have also risen to their highest levels since July 2020. Because winding up petitions are officially classified as compulsory liquidations, the category has seen a year on year rise of 131% and a huge 120% increase in monthly figures.
Chris Horner, insolvency director with Business Rescue Expert, said: “The removal of all of the restrictions coupled with steeply rising energy costs and supply chain issues will bring to bear lots of pressure on commercial tenants who are already struggling with their financial position.
“During the past few years, The government had put in place a system that effectively ring-fenced any Covid related debts to encourage forbearance and consensual repayment plans.
“The corporate landlords had little choice but to accept any rent reductions, deferrals and even write off some arrears in order to secure income for the longer term by having trading tenants.
“Now all protections have been removed, landlords can begin to be more aggressive in their tactics regarding outstanding debts by being able to bring winding-up petitions and threaten eviction.
“There will be some businesses that are already in trouble with growing debts, cash flow pressures and seeing their working capital squeezed.
“They should look to get advice immediately before their position worsens or if their creditors lose patience and decide to force the issue. If these next few weeks could be their last chance to make the necessary changes to survive then the sooner they act, the better.”
There is a window of opportunity available but it is closing.
Winding up petitions and statutory demands are back and after being denied their use for over two years, creditors will be itching to use them to help shore up and improve their own finances.
We continue to offer a free consultation for any director or business owner who wants to discuss how they can improve their own company’s standing – so why not make that call today?