UK Government extends insolvency measures and the temporary ban on business evictions to 31 March 2021

On 9 December 2020, the UK Government announced its intention to extend the temporary restrictions on the use of statutory demands and the presentation of a winding up petition until 31 March 2021, as set out in the Corporate Governance and Insolvency Act 2020. This followed a separate announcement to extend the ban on business evictions to 31 March 2021, and the recent re-introduction of the suspension of personal liability of directors for wrongful trading.

Whilst this news may come as a welcome relief for many businesses in the short term, this will likely be the final extension of these temporary measures, and it appears that the end of the road is now in sight. It is crucial that directors continue to monitor their companies’ financial position closely and to seek professional advice as early as possible.

In response to the challenges faced by businesses due to the impact of the COVID-19 pandemic, the Government implemented several temporary measures to protect businesses from insolvency. These measures were due to expire on 30 September 2020 but were extended to 31 December 2020. To summarise the current position following the Government’s latest announcements:

  • Statutory demands and winding-up petitions will continue to be restricted until 31 March 2021, to protect businesses from aggressive creditor action in relation to the recovery of coronavirus related debts.
  • A supplier’s ability to terminate a supply contract or ask for additional payments whilst a company is going through an insolvency process, remains restricted. However, small suppliers will remain exempt from the obligation to supply, on a temporary basis, until 31 March 2021.
  • The suspension of the wrongful trading provisions, which initially expired on 30 September 2020, were re-introduced on 26 November 2020. This measure has now been extended to 30 April 2021.
  • The temporary ban on business evictions and commercials landlords’ use of Commercial Rent Arrears Recovery (CRAR), is also extended to 31 March 2021.

We would urge directors who are concerned about their company’s financial position to seek advice early. If you would like to discuss your situation in confidence, please do get in touch with us.

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This note is not intended to substitute legal advice from your instructed lawyer. You should always consult with your lawyer directly regarding any specific queries you may have.

Faye Griffiths

Faye qualified as a solicitor in 2008 and is a specialist corporate restructuring and insolvency lawyer, with over 12 years’ experience working both in the UK and internationally.

Faye’s areas of expertise include the following:

  • Creditor representation in restructurings and insolvencies
  • Priority, validity, and enforcement of security
  • Contingency planning for lenders and debtors
  • Debt refinancings
  • Distressed business and asset sales
  • Formal insolvency procedures
  • Contentious insolvency
  • Directors duties and pre-insolvency advice
  • Cross-border insolvency issues
Faye Griffiths