Although the restrictions on debt collection have been mostly lifted from October 1 2021, some limits remain on the use of Winding-up petitions by commercial landlords in respect of rent arrears until March 2022.

1. Petitions can only be sought on debts exceeding £10,000 compared with the pre-pandemic threshold of £750.
2. Creditors must give debtors 21 days to propose resolutions.
3. WUPs cannot be used for pursuing commercial rent arrears but….

…the sting in the tail is that debtors will still be able to seek county court judgements to try to recover commercial rent arrears.

As always, I advise businesses in difficulties to manage their cash flow and to seek help if you are in difficulties.

You can download K2's free cash management tool here https://www.linkedin.com/smart-links/AQG7fCQTtXx4Zw/37139976-4f42-454f-aff5-75ae4be992c7

Or message me if you need someone to talk to.

If you've received a Winding-Up Petition and you want to pay but your company doesn’t have sufficient funds here are the possible outcomes:

Deferred Payments

While the Court will normally adjourn a Petition Hearing to allow for time to make the payment, too many directors run out of time if they need to collect in outstanding debts, sell assets or raise funds.

There are fundamentally only two options for deferring payments when a company doesn’t have sufficient funds:

• Petitioning Creditor Payment Plan; or
• Company Voluntary Arrangement

Petitioning Creditor Payment Plan

This involves reaching agreement over payment terms that provide sufficient reassurance for the Petitioning Creditor to support a dismissal of the Winding Up Petition. Such an agreement will not bind other creditors who might want to take over the Petition but if it is agreed before advertising the Petition it can be achieved.

However, HMRC does not agree such plans so this option is not available if they...

I have written previously about short term thinking by businesses and the effect it has been having on their ability to plan ahead for the medium and longer term.

It has been affecting businesses’ ability to invest in capacity, efficiency and R & D as planning for growth. Instead, most SMEs seem to be focused on cash flow and immediate profits, in that order.

In the current uncertain economic climate short term thinking may seem to be a rational response by creditors seeking payment.

However, there is another, perhaps more worrying trend that I am seeing among creditors, many of them suppliers to SMEs. Larger companies owed money and their solicitor advisers are often pursuing debts by early use of a winding-up petition instead of speaking with their SME clients and if necessary helping them. Unlike most reporting which is about large companies delaying payments to SMEs, I am focusing on large companies’ aggressive debt collection from SMEs.

Sometimes it is necessary...