What do they need to know?

This month sees a return to lighter nights, trees and flowers waking up from their long slumber and poking out into the sun and a more optimistic sense than has been displayed for the past two years at least. 

But this month will also see the final removal of the last of the pandemic business support measures which could provide an immediate challenge to several businesses.

From March 31st, the remaining restrictions on winding up petitions are lifted meaning they can be brought by creditors for any outstanding debts that have remained unpaid.

Additionally another protection for commercial tenants is being lifted, removing a 14-week notice period that their landlords have to give before any possible eviction proceedings for unpaid rent or historic rent arrears that haven’t been brought up to date. 

Six ways to deal with a winding up petition

According to the Insolvency Service official corporate insolvency statistics for last month, compulsory liquidations rose to their highest level since July 2020 with 118 recorded. 

Winding up petitions are classified as a compulsory liquidation so even with current restrictions, the category is up 131% year on year and up over 120% from the previous month’s figures. 

This is the clearest indicator that their use is increasing and with no restrictions at all, could well see them rise even higher. 

Winding up petitions and statutory demands

Chris Horner, insolvency director with BusinessRescueExpert, said: “The final removal of restrictions coupled with rising energy costs and ongoing supply chain issues will bring a lot of pressure on commercial tenants who are already in financial difficulty. 

“During the past couple of years, Covid related debts were effectively ring-fenced to encourage consensual repayment plans. 

“Corporate landlords had little choice but to accept rent reductions, deferrals and even waive some arrears in order to secure income for the longer term. 

“Now these protections are disappearing at the end of the month, it means landlords can be far more aggressive in their approach to tenants with outstanding debts by being able to bring winding up petitions and threaten eviction. 

“Some businesses that are already struggling to service their debts and are undergoing cash flow and working capital pressures should act to get advice immediately before their position worsens or their landlord and other creditors lose patience and decide to force the issue themselves – which they can at the end of the month.

“These next four weeks could be the last chance for a company to make the necessary changes they need to survive.”

There is a window of opportunity available right now but it is slowly closing. 

In less than a month, winding up petitions and statutory demands return and after being denied their use for over two years, many creditors will be itching to use them to help improve their own finances. 

We offer a free consultation for any director or business owner who wants to discuss how they can bring their company back from the brink. 

The best time to get advice is always right now so take the first step and get in touch today.