It is time that we restore the right and interest of justice to those who are owed significant sums of money.
By Lauren Steel-Smith, Commercial Litigation Solicitor
The Covid 19 pandemic has been an interesting and difficult hurdle to overcome as a litigator. It is our duty to act in the best interests of our client undoubtably, whether that be bringing claims or staunchly defending them.
One big obstacle that has been in our path has been the restrictions on winding up petitions, statutory demands and insolvency proceedings as a whole. These restrictions have been in place for almost two years and were consistently extended throughout this period.
A taste of the restrictions that were imposed include:
· The debt threshold for businesses to issue a winding up petition was raised from a modest £750 to £10,000;
· Creditors were required to seek proposals from debtors giving them 21 days to make those proposals;
· Commercial landlords could not present a winding up petition against limited companies in respect of commercial rent arrears.
On 28 March 2022, the insolvency service announced that the temporary measures applied during the pandemic will expire on 31 March 2022.
Needless to say, there will be a mixture of great sighs of relief on one side and sweats of panic on the other.
Who does this impact?
The biggest beneficiaries of the lifting of these restrictions are most definitely landlords. Landlords get a bad rep, but they have been huge losers in the pandemic, missing out on rent due and having little to say or do about it.
I have been working on matters during the pandemic where tenants have got into thousands of pounds of rent arrears – some through no fault of their own of course – but it has become an easy excuse to blame COVID for their inability to pay the rent or even provide a route to contributing to their arrears.
That is not to say that those tenants who have genuinely been affected through imposed closures will suddenly find themselves being handed a winding up petition tomorrow! There still remains protection around rent arrears incurred between March 2020 – July 2022 (depending on the type of business you operated) under the Commercial Rent (Coronavirus) Act 2022.
The restrictions have certainly limited the options available to those parties who wish to recover payment of the debt and require payment of that debt urgently. Usually court proceedings take a significant amount of time and are just not fit for purpose for undisputed/straightforward debt claims.
What should you do now?
If we are lifting restrictions on people’s everyday life, then it is the right time to replicate that in the legal industry (and other industries at that). It is time that we restore the right and interest of justice to those who are owed significant sums of money.
We urge those who are owed money who have been prevented from recovering the same, or who have had little in terms of proposals from creditors to consider if this can be taken further.
On the flip side, if you know you owe money to a debtor and are at risk of a winding up or bankruptcy petition, think about how you can prevent that from happening, engage with your debtors or seek the assistance of an insolvency practitioner.
If you’re looking for legal support in this area, please contact me directly on email@example.com or our Head of Corporate Recoveries and Insolvency, Chris Love on firstname.lastname@example.org.