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Winding-up Petitions: New conditions and what you need to be aware of!

Throughout recent lockdowns, emergency measures were put in place preventing creditors from presenting winding-up petitions. The implemented measures were lifted and new regulations came into force on 1st October 2021. In our latest blog, Gemma Middleton, from our Dispute Resolution department here at Hodgkinsons Solicitors, Skegness, explains what the changes mean.

Winding-up Petitions: New conditions and what you need to be aware of!

Since March 2020, creditors have been prevented from presenting winding-up petitions based on statutory demands served between 1st March 2020 and 30th September 2021, nor were they able to present a winding-up petition between 1st March 2020 and 30th September 2021 based on the company’s inability to pay its’ debts unless they were able to establish that the COVID-19 pandemic had not detrimentally effected the companies finances, or that the debt would have arisen anyway, had it not been for the pandemic.

A statutory demand is a written demand for payment of a debt served on either an individual in accordance with Section 268(1)(a) of the Insolvency Act 1986, or a company, in accordance with section 123(1)(a) or 222(1)(a) of the Insolvency Act 1986, and is often the first step taken by a creditor who intends to present a bankruptcy or winding-up petition against the debtor. If a company debtor fails to respond to a statutory demand, they are deemed unable to pay their debts and are at risk of winding-up proceedings being issued against them which could result in them being put into compulsory liquidation.

From 1st October 2021, the temporary restrictions placed on statutory demands have been lifted, but the restrictions on presenting winding-up petitions have been extended to March 2022 and are subject to the following conditions:

1. Winding-up petitions may not be presented in respect of commercial rent that is unpaid because of a financial effect of the COVID-19 pandemic. This condition supports the extended temporary provisions on forfeiture for commercial tenants.

2. A winding-up petition must not be presented in relation to a debt or debts totalling less than £10,000.00.

3. A winding-up petition must not be served unless written notice has been delivered to the debtor seeking their proposals for repayment of the debt, and the debtor has not made a proposal to the creditors satisfaction within 21 days.

4. A creditors reliance upon non payment of a statutory demand to evidence a debtors inability to pay their debt will be provided for subject to the other conditions being met.

These new conditions are a temporary measure aimed at preventing commercial rent arrears from increasing further, which have accumulated as a result of the pandemic’s disruption to companies and their ability to operate, from being used as a basis for them being wound up. The extension of the restrictions in winding up petitions, as well as separate interim restrictions on forfeiture measures that will continue until 25th March 2022, will allow for further movement in finding a lasting solution to the countries reported £7.5 billion in outstanding arrears.

The removal of the constraints on statutory demands appears to have been replaced by written notice requirements. In this regard, the Insolvency Rules 2016 have been amended to require creditors to include statements in a petition stating that they have complied with the conditions and, where offers for the payment of the debt are not satisfactory to the creditor, the reasons why. Furthermore, the increase in the non-excluded debt level of £10,000.00 may imply that creditors are less likely to pursue formal winding-up procedures for relatively small amounts, which it is argued, is long overdue.

If you are owed money by a company, we recommend that you speak with them to distinguish whether they are able to enter into a payment plan with you to pay off their debt. You should also consider whether there are other methods of recovering the debt available to you as winding-up proceedings should always be regarded as a last resort. If you require assistance recovering monies from a company, or you are a company that has been presented with a winding-up petition, our team of Lawyers are on hand to assist you.

Here at Hodgkinsons Solicitors, Skegness, our Team of Dispute Resolution Lawyers are experts in providing advice to creditors and companies alike. Our Lawyers have over 40 years’ experience in debt recovery and insolvency proceedings and have an excellent reputation for assisting individuals and companies both locally and nationwide throughout the East Midlands and rural Lincolnshire to include Skegness, Boston, Louth, Lincoln, and Grimsby. To get the expert legal advice you need, call Hodgkinsons Solicitors on 01754 897150 or submit a contact form now to request a call back.


*Sources: 2021 Regulations, 27 September 2021,