If you are a director of a debtor company which is, or could soon be, subject to a statutory demand or winding up petition, this is for you – a short summary of what’s in the current draft of the Corporate Insolvency & Governance Bill (‘the Bill’):
Can a winding up petition be made against you?
The answer is possibly. It depends on the facts…
The Bill temporarily prevents:
- Any statutory demands served between 1 March 2020 and 30 June 2020 from being used to present a winding-up petition on or after 27 April 2020;
- Creditors from presenting a petition from 27 April 2020 (for reasons other than after the serving of a stat demand) unless the creditor believes and can show:- COVID-19 has had no adverse financial effect on the debtor company. Note the wording no financial effect, it doesn’t say no major / material financial effect – so even a small adverse effect will prevent the petition succeeding. ; or
– The ground would have arisen in any event even if COVID-19 had not had a financial effect on the debtor company.
And I expect the date of 30 June to be extended, possibly for 6 months.
I will keep you informed of developments…
Paul Brindley
6 June 2020
PS, in addition, it’s worth noting that if a winding up order has already been made (post 27 April), the clock can be turned back, the position restored to what it would have been had the order not been made and the petitioner responsible for costs!
Update 26 June 2020 – the date of 30 June 2020 has been extended to 30 September 2020. And the legislation – the Corporate Insolvency and Governance Act 2020 gives the Secretary of State to extend the period in 6 months chunks.