Use of statutory demand to make company insolvent suspended until June

08 Apr 2021

In a recent blog we highlighted the further extension to the temporary restrictions on a Landlord’s ability to forfeit a commercial lease and utilise CRAR to pursue a tenant for unpaid rent until 30 June 2021.  The Government has also now extended, until 30 June 2021, the temporary restrictions introduced under the Corporate Insolvency and Governance Act 2020 relating to winding up petitions and statutory demands.  These changes were introduced by the Corporate Insolvency and Governance Act 2020 (Coronavirus) (Extension of the Relevant Period) Regulations 2021 (SI 2021/375) which include other changes, too.
 
The effect of the extension is to prevent a landlord (or any other creditor) presenting a winding up petition against a company that is based on a statutory demand served between 1 March 2020 and 30 June 2021.  Further, no winding up petition may be presented (at court) between those dates, based on the company’s inability to pays its debts, unless either (1) there are reasonable grounds for believing that COVID-19 has not had a financial effect on the company, or (2) the company would have become unable to pay its debts even if Covid-19 had not an effect on the finances of the company.  The Court cannot make a winding-up order on winding-up petitions unless it is satisfied these requirements are met.
 
It is still technically possible to serve a statutory demand, but it will not have the same effect and nor will the debtor perceive it to be the threat it once was.  Instead, a simple letter can be sent to the debtor demanding payment in the first instance, and the legal options can be considered later. 
 
Do remember that these restrictions only apply to companies; if your debtor is an individual, then the usual process will apply which requires the service of a statutory demand before a creditor can present a bankruptcy petition.

Further reading

DMH Stallard heads to the Olympics in support of St Catherine’s Hospice!

Blog, News & PR
21/04/2021
Our staff are at it again! We're raising money for St Catherine's Hospice by walking, running, cycling and everything in between to cover 13,262km in 16 weeks
Read more Read

DMH Stallard advises Optiva Securities as broker to Tirupati Graphite in £10 million equity fundraising

News & PR
20/04/2021
Nick Williams advised Optiva Securities Limited on its role as broker in arranging an oversubscribed £10 million placing for Tirupati Graphite plc
Read more Read

New Debt Respite Scheme provides “breathing space” to some debtors

Blog, Legal Updates
20/04/2021
New Regulations require individuals with problem debt to seek advice from a dedicated adviser in order to apply for a moratorium
Read more Read

Keep the cash flowing

Blog
19/04/2021
Recent stats suggest cash flow has all but dried up for many businesses; Kelly Mills reflects on the multi-faceted management that might help
Read more Read
  • Brighton Office

    1 Jubilee Street

    Brighton

    East Sussex

    BN1 1GE

  • Gatwick Office

    Griffin House

    135 High Street

    Crawley

    West Sussex

    RH10 1DQ

  • Guildford Office

    Wonersh House

    The Guildway

    Old Portsmouth Road

    Guildford

    Surrey

    GU3 1LR

  • Horsham Office

    Ridgeland House

    15 Carfax

    Horsham

    West Sussex

    RH12 1DY

  • London Office

    6 New Street Square

    New Fetter Lane

    London

    EC4A 3BF

  • Get in touch