The Government announced on 9 December 2020 that the temporary restrictions on winding-up petitions and statutory demands in England & Wales as set out in the Corporate Insolvency and Governance Act 2020 (CIGA), will now be extended until 31 March 2021.

The extension is made in line with an extension to the restrictions on commercial forfeiture and commercial rent arrears recovery (CRAR), which have also been extended until to the end of March. It is likely that, in line with previous extensions, Northern Ireland will follow suit.

Alongside the Act in England, an Insolvency Practice Direction (“IPD”) came into force on 3 July 2020 and provides additional information in respect of winding up petitions and the “coronavirus test”. Paragraph 3 of the IPD states, amongst other things, that a petition will not be accepted for filing unless it contains a statement explaining the reasoning for non-payment of the debt. As such it is still possible to file creditors’ winding up petitions in England & Wales. Bankruptcy petitions are not affected and can be filed as normal as the Act relates to company matters.

The IPD is not however applicable in Northern Ireland. Under the latest Masters’ Court Guidance dated 9 December 2020 there is no change to the previous position concerning creditors’ petitions in that no new creditors’ petitions, either bankruptcy or winding-up, may be presented unless the circumstances are deemed to be exceptional and the Court has approved the presentation of the petition. Unlike England & Wales, in Northern Ireland no bankruptcy or winding up orders will be made, even by consent of the parties, on foot of creditors’ petitions.

In light of the clear distinction between the Bankruptcy Courts in Northern Ireland and England & Wales, together with the likelihood that Northern Ireland will also extend GIGA and CRAR, creditors will need to consider what alternative legal remedies are open to them in Northern Ireland. If you or your business is affected by any of these issues, please contact the Debt Recovery & Insolvency team at MKB Law to discuss further.