The last of the remaining debt recovery restrictions have been lifted

News / / London

On 1 April 2022, the last of the remaining debt recovery restrictions were lifted, and the insolvency regime returned to its pre-pandemic position.
These last changes were part of the general relaxation of coronavirus-related legislation of the Corporate Insolvency and Governance Act 2020, designed to protect companies impacted by the pandemic.

Until 31 March 2022, the restrictions provided debtor companies with breathing space for debts under £10,000 (the usual limit being £750). Creditors were required to serve an additional Written Notice providing debtors with a further 21-day period before being able to issue a Winding-up Petition for debts over £10,000 (unless otherwise approved by the Court). 

The relaxation of restrictions allows creditors to, once again, freely pursue unpaid debts where there is at least £750 not in dispute. This includes presenting Winding-up Petitions against companies for debts of at least £750 (the statutory threshold) and an ability to rely upon non-payment of an invoice, providing it has been rendered to the debtor company and is due and owing. Alternatively, a debt detailed in a Statutory Demand as evidence that a Company cannot pay its debts, as and when due, as a ground for presenting a Winding-up Petition. 

A key exception is following the Commercial Rent (Coronavirus) Act 2022 on 25 March 2022, which prohibits a Winding-up Petition from being presented against a business tenant for rent arrears incurred by tenants during the pandemic. 

The return to the pre-pandemic position is welcome news to creditors seeking to pursue companies for debts of less than £10,000 and allows legal action, which may have been paused for two years, to progress. 

Maintaining a steady cash flow is more crucial than ever for business resilience and growth in the current financial climate. To that end, swift and effective action must be taken against any aged debt to avoid unnecessary financial pressure. 

If you are a creditor seeking the recovery of an outstanding debt, Ince is here to help. Please get in touch with a member of our team today.

Gareth Jones

Gareth Jones Partner, Head of Dispute Resolution

Charlotte Dawes

Charlotte Dawes Associate


Debt recovery / insolvency and corporate recovery