After 30 September 2021 and until at least 30 March 2022, the current restrictions on winding up petitions will change, the government has recently announced. Petitions will not be possible in respect of commercial rent arrears, but for other types of debt, there will be an amendment to the winding up process by raising the current debt threshold to at least £10,000 (up from £750), and creditors will first be required to seek proposals for payment from a debtor business, giving them 21 days for a response before they can proceed with winding up action. Draft legislation is expected shortly.
We expect creditors owed more than £10,000 will be prepared to commence winding up petitions under the new processes, so businesses with large debts will start to face additional pressure from October. It will be more important than ever that businesses enter into dialogue with their creditors or take advice on their options for restructuring at an early stage.
Creditors too should be prepared to be impacted by the amendments to the winding up petition process. Debtor companies facing cash flow problems will likely treat creditors threatening to petition with more priority. All businesses should have robust credit control processes in place to ensure they keep their debtors to the required payment terms to prevent problems.
Our top tips for creditors can be found here.
If you need support with your credit control function, Ashfords’ debt recovery specialists can assist you.