Covid-19 Ban on Statutory Demands and Winding Up Petitions Extended

Update June 2021 – since the time of writing, the temporary restrictions on Statutory Demands and Winding Up Petitions discussed in this article have been further extended to 30 September 2021.

The temporary Covid-19 measures introduced under the Corporate Insolvency and Governance Act 2020 (CIGA) have been extended.

The suspension on insolvency proceedings against companies, including the issue of Statutory Demands and Winding Up Petitions is now in place until at least 30 June 2021.

For businesses and individuals who are owed money by companies who cannot repay, this will understandably be a blow.

Here we outline what this could mean for your business and whether there are any available options for creditors.

What are the current rules on corporate insolvency?

In June 2020, the corporate insolvency process underwent several significant changes. Some of these changes were permanent to shift the UK system to a more US ‘company rescue’ style approach. Some were temporary in response to the coronavirus pandemic.

We previously wrote about the changes to the corporate insolvency process here, where you can read about the new permanent measures and the temporary measures as of June 2020.

The temporary measures were one of the government’s many steps to support businesses through the pandemic. Upon announcement of the measures, the government stated:

“Due to the current coronavirus pandemic, many otherwise economically viable businesses are experiencing significant trading difficulties. The concern is that the disruption will give rise to a wave of insolvencies.”

To tackle this concern, the government used CIGA to put in place a suspension on serving Statutory Demands in any circumstances. It also placed restrictions on Winding Up Petitions where the unpaid debt is due to Covid-19.

Winding Up Petitions may be brought, but are assessed on a case-by-case basis to determine why the debtor has not paid the debt. Where the court finds that the debt is due to Covid-19, it will not make a Winding Up Order.

Originally, these measures were to be in place until 31 December 2020. This period was subsequently extended to 31 March 2021 and has now been extended further to 30 June 2021.

Suspension on commercial evictions also extended

For commercial landlords, Covid-19 has had a significant impact. As well as the temporary measures under CIGA, in March 2020, the government announced that it was suspending landlord’s ability to forfeit commercial leases for non-payment of rent. This suspension was also recently extended to 30 June 2021.

What options do businesses have?

Corporate insolvency should usually be a last resort, regardless of the circumstances behind the debt. Alternative debt recovery options could include:

  • Conducting informal negotiations with the debtor and finding temporary repayment solutions.
  • Commencing county court money judgment proceedings – the likelihood of recovery should always be weighed carefully against the costs of proceedings, particularly where it is clear that the debtor does not have the means to repay or if there is a risk of the debtor defending the claim. Subsequently, any money judgment may be enforced via various means or used as a basis for winding up proceedings if insolvency is the only viable option.

Where insolvency is the most appropriate option, it may be possible to bring a Winding Up Petition if you can prove that the debtor’s inability to pay is not a result of Covid-19. Due to the moratorium on Statutory Demands, you would need to provide alternative evidence for the debt.

Creditors should be aware that due to the requirement to consider insolvency matters on a case-by-case basis, taking this route could take longer than would usually be the case.

Our specialist solicitors can provide advice to commercial landlords and other debtors about their recovery options, including representing businesses during winding up proceedings.

As well as considering legal action, it may also be worth reviewing your insurance policies and speaking with your insurers about whether you have any options, such as business interruption cover. 

Do you need advice about debt recovery and insolvency?

At Preston Redman, we have a dedicated corporate and commercial law team who specialise in business recovery and insolvency cases.

We provide clear, practical advice to businesses and individuals seeking to explore their legal options for recovering debts, with particular expertise advising commercial landlords in relation to rent arrears and other tenancy related debts.

Get in touch with our corporate insolvency partner Tim Flower by giving us a call or emailing