Following the Prime Minister’s announcement on 16 June 2021 that the deadline for lifting Covid-19 restrictions has been extended until 19 July 2021, the government has also announced the extension of business support measures in its official guidance,which will presumably be passed into law in the coming days.

The insolvency measures introduced at the start of the pandemic have been further extended from the end of June 2021 until 30 September 2021. As such, restrictions on statutory demands and winding up petitions will remain in place for a further 3 months in an effort to protect companies from creditor enforcement action where their debts relate to the pandemic. Whilst it is still permissible to issue a winding up petition against a debtor company at this stage, that is only if the petitioner has reasonable grounds for believing that Covid-19 has not had a financial effect on the company or the debt would have arisen anyway.

Other measures subject to the extension include:

• the provision for companies to enter into a moratorium if they have been subject to an insolvency procedure in the previous 12 months. It also provides that small suppliers will not have to continue to supply a business in insolvency.
• A continuation of the protection from forfeiture (eviction) for commercial tenants for non-payment of rent, together with restrictions on rent recovery through the Commercial Rent Arrears Recovery procedure

It is not yet clear whether the suspension of liability of company directors for wrongful trading will also be extended beyond the end of June.

It is possible that the above measures may be extended beyond 30 September 2021 with the government usually announcing the extension of measures very close to the end of the current deadlines. It remains to be seen what impact the removal of Covid support measures will have on businesses currently relying on them to stay afloat.

If you have any questions about this or any other insolvency related issue, please contact the insolvency and restructuring team here.