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End of temporary insolvency measures

The temporary measure introduced by the Government as a response to the pandemic that prevented winding-up petitions being issued against non-paying debtors has been troublesome for creditors.  It meant creditors had limited options with regards to taking enforcement action against debtors if they could show they had been affected by Coronavirus (regardless of whether they could actually pay or not!).


The temporary measure comes to an end on 30 September but the government have announced plans for a “soft landing” for debtor companies who have been affected by Coronavirus by introducing three new temporary measures.

  1. Increasing the threshold to enable a winding up petition to be presented from £5,000 to £10,000;
  2. Creditors must seek proposals from the debtor for repayment (and allow 21 days to respond);
  3. Commercial landlords must still demonstrate that debts are not Coronavirus related until the end of March 2022

The return of an option for creditors to take enforcement action by way of issuing a winding up petition against non-paying debtors is a relief for a lot of creditors and is another move towards pre-pandemic normality.  

The tapering off of the furlough scheme at the end of September also signals the government’s intention to get back to “normal” over the coming months, albeit this may be unfair on a number of companies who are still hampered by Coronavirus restrictions (notably the Travel Industry). 

The number of formal insolvency cases remains low but the return of winding-up petitions and probably more importantly, the return of the ability to take enforcement action, is likely to lead to an increase in formal insolvency case numbers as we enter Q4. Whilst an avalanche of insolvency is not expected yet, it feels inevitable that business failures are going to increase not least because indebtedness to lenders, landlords, HMRC and others are are significantly greater for a lot of companies, than they were pre-pandemic.


Webinar – Raising the awareness of overtrading

Overtrading can occur where a business expands rapidly but does not have the appropriate resources to support this expansion. The pandemic has not only hit a lot of businesses financial resources but in some sectors finding appropriate staffing and obtaining supplies in a timely manner are problematic. 

In this webinar Sandra, Tom and Jennie will explore what overtrading is along with the early warning signs and what directors might do to protect their business.

Date: 28th September 2021         Time: 2-2.45pm         Cost: Free        Venue: Your Desk


If you have any questions or would like to get in touch, please do so by contacting any members of the BRI Team. Watch out for further newsletters from us, covering a variety of topics for restructuring your business.

Kind regards

Paul Davies  


The information in this newsletter must not be relied on as giving sufficient advice in any specific case.