Temporary measures preventing insolvency during the coronavirus pandemic will be extended, the Government has announced.
It means the restrictions on statutory demands and winding up petitions will remain for a further three months until 30 September 2021.
Introduced as part of the Corporate Insolvency and Governance Act in March 2020, the temporary rules are designed to protect vulnerable businesses from aggressive creditor enforcement where their debts relate to the pandemic.
The measures being extended include:
- Restrictions on Statutory demands and winding-up petitions extended until 30 September 2021
- Statutory demands and winding-up petitions will continue to be restricted to protect companies from creditor enforcement action due to debts related to Covid-19
- Entry into a moratorium will remain relaxed until 30 September 2021
- Entry into a moratorium will remain relaxed and a company will be able to enter a moratorium if they have been subject to an insolvency procedure in the previous 12 months.
Commenting on the extended measures, Minister for Corporate Responsibility, Lord Callanan, said: “We’re extending these important measures to give businesses the extra breathing space they need as we cautiously reopen the economy and look to build back better from the pandemic.
“With the threat of aggressive creditor action and insolvency eased, companies will be able to focus all their efforts on their recovery.”
Dr Roger Barker, Director of Policy & Corporate Governance at the Institute of Directors, added: “During the pandemic, it has been essential to provide company directors with the means by which they can sustain inherently viable businesses.”
According to the latest statistics, almost eight in 10 (80 per cent) small and medium-sized businesses say their revenue has declined during the pandemic, while one in four (25 per cent) are concerned about defaulting on loans and a similar number (28 per cent) doubt their ability to sustain their supply chains.