Credit, Collections & Insolvency News
The Government has announced that it intends to reinstate the temporary suspension of the use of statutory demands and winding-up petitions, extending the measures until 31st March 2021.
On 25th November the government announced it intends to reinstate the temporary removal of the threat of personal liability for wrongful trading from directors until 30th April 2021.
The Government has also announced that companies and other qualifying bodies with obligations to hold AGMs will continue to have the flexibility to hold these meetings virtually until 31st March 2021. This means that shareholders can continue to examine company papers and vote on important issues remotely.
Commenting on the Government’s decision to extend its ban on the use of statutory demands and winding-up petitions. Christina Fitzgerald, Vice President of insolvency and restructuring trade body R3, said “Today’s news will provide some welcome breathing space for many struggling firms that are currently trying to make the most of a choppy pre-Christmas trading period. These firms now have an extra three months largely free from the threat of creditor action, which means more time to try and get back on an even keel.
“However, despite the positive impact today’s announcement will have, these measures can’t be extended indefinitely. The big question for the Government is how these support measures can be withdrawn next year in a way that doesn’t lead to a cliff edge for businesses that have weathered an unprecedented year of trading difficulties.”
“One key step the Government could take to help manage this process would be to ensure that HMRC takes an engaged – and supportive – approach to its role as a key creditor in most insolvencies. With its new preferential status, HMRC’s support as a creditor will be required to ensure that viable restructuring proposals can be agreed – proposals that could potentially save thousands of jobs and businesses as the UK adjusts to a post-COVID environment next year.”
“In the meantime and despite today’s news, ww would urge anyone who is concerned about their business’s financial future or is spotting signs that it is starting to struggle to seek advice from a qualified professional as early as possible. Doing so will give them more options and more time to make a considered decision about what’s best for their business.”
