Is this the news that we in our glorious profession have been waiting for? Yesterday (Thursday 9 September) the Government told us the news we thought might be announced several months ago; the temporary measures brought in to support businesses from insolvency during the pandemic will be phased out from 1 October.
Directors with fingernails dirtied by hanging off the edge of a cliff for months and months may finally get to see the ground beneath them get very much larger extremely quickly. Companies that have hung on by being protected from creditor action will finally have to deflate their Governmental armbands and learn to swim again in the sea of corporate reality.
We know why NTI's choice for the next James Bond and his team did it, and we now know it cost us all a third of a trillion pounds, but it is time to let the attack dogs of the creditors loose as the economy returns to normal trading conditions. There is to be new legislation, which will be in place until 31 March 2022 and it will:
1 Protect businesses from creditors insisting on repayment of relatively small debts by temporarily raising the current debt threshold for a winding-up petition to £10,000 or more. (Interesting; mind you, it has been £750 since 1483.)
2 Require creditors to seek proposals for payment from a debtor business, giving them 21 days for a response before they can proceed with winding-up action. (Almost what happens now, as there is a 21 day period between putting in a statutory demand before letting loose with a petition.)
Lord Callanan, a Business Minister, who has been close to a debt following his moat renovation said: " ... we know many smaller businesses are rebuilding their balance sheets and reserves, and some will need more time to get back on their feet. These new measures protections will help them to do that."
Landlords will still be livid, as it is recommended that businesses should pay contractual rents where they are able to do so. However, the existing restrictions will remain on commercial landlords from presenting winding-up petitions against limited companies to repay commercial rent arrears built up during the pandemic.
Whilst predictably, there is a continuation on the restriction on winding up, in respect of commercial rent only. Commercial tenants will continue to be protected from eviction until 31 March 2022, whilst the Government implements a rent arbitration scheme to deal with commercial rent debts accrued during the pandemic.