10: Insolvency Measures

Temporary insolvency measures that were put in place during the Covid-19 pandemic have been lifted today, as the remaining pandemic support schemes end.

Nick and Jo ask how this could all play out. In a world in economic turmoil and still recovering from the enormous impact of the covid pandemic, and now facing a different crisis in Ukraine... times have never been more uncertain.

The insolvency measures were introduced as part of the Corporate Insolvency and Governance Act 2020 to limit the impact of Covid-19 related trading restrictions on businesses. Measures helped to protect firms from being wound up by creditors where businesses had suffered cash-flow problems because of reduced pandemic trading. Businesses operating in the retail and tourism sectors were particularly badly hit by the pandemic and relied heavily on government support. Additional measures had also been put in place in the commercial rental sector to protect tenants who were unable to meet rent payments.

Of course, these measures had helped keep the number of businesses folding during the height of lockdown restrictions at a minimum. But as the insolvency regime enters back into normal pre-pandemic operations, there's likely to be a significant increase in creditor activity. It is highly anticipated that creditors, who have not been able to seek to wind up insolvent companies in respect of most debts for approximately two years, will now seek to take action which may lead to a significant increase in petitions...