Creditor action protections end in March
Posted on 31st January 2022 at 14:00
From March 31, 2022 companies with debts outside of their rental arrears face the removal of protection against creditor actions.
Debts outside rental arrears affected
Rent arrears that have occurred due to forced closure as a result of the pandemic are excluded from these measures, as they are covered by other legislation.
Debts outside of rent arrears, must reach a £10,000 threshold before a petition can be filed. Before this filing, the creditor must have given the debtor a Schedule 10 Notice. This states that if a proposal for payment of the debt has not been made within 21 days of the notice, then the creditor intends to file a winding-up petition.
Firms must prepare to deal with possible litigation from April 2022
On March 31 any business with debts of more than £10,000 that are not related to rent arrears needs to be sure that it is prepared for these protections to be removed, unless more legislation is passed before that date.
Challenges could be made for as little as £750 owed
Law firm Freshfields Bruckhaus Deringer highlighted that the Government has not changed the threshold to serve a statutory demand for winding-up from £750. So, while the current legislation is in place there are two thresholds in place for the compulsory winding-up process. But once Schedule 10 notices are repealed, the lower level of £750 remains.
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