Restrictions on debt collection in Northern Ireland extended

01 Oct 2020

The Corporate Insolvency and Governance Act 2020 (Amendment of Certain Relevant Periods) Regulations (Northern Ireland) 2020 came into effect on 29 September 2020 in Northern Ireland. The Regulations amend the Corporate Insolvency and Governance Act, which came into force some months ago.

The Purpose of the Act:

The Corporate Insolvency and Governance Act made substantial changes to Insolvency law in Northern Ireland to help companies manage the financial and practical difficulties of COVID 19.

The Purpose of the Regulations:

One of the most significant changes is the extension of time applied to restrict creditors issuing statutory demands/winding up petitions – The issuing of statutory demands and winding up orders will now be restricted until 31 December 2020. It was previously only restricted until 30 September.

What does this mean for creditors pursuing a debt?

The legislation opposes restrictions regarding corporate insolvency only. It appears then that statutory demands and bankruptcy petitions can still be brought against individuals by their creditors.

It is worth noting that the legislation does not introduce a ban on the service of statutory demands in all company matters – simply that you cannot file a winding up petition based on a demand served between 1 March and 30 September 2020 (now amended to 31 December 2020). The legislation does however permit creditors to proceed with a petition if it can be shown that it had reasonable grounds for believing one of the following:

(a)  Coronavirus has not had a financial effect on the company, or

(b)  the facts by reference to which the relevant ground applies would have arisen even if Coronavirus had not had a financial effect on the company.

While this appears to allow creditors to issue statutory demands in certain limited circumstances, this legislation must be read alongside the recent High Court’s Directions of 21st September 2020 in relation to cases listed before the Bankruptcy and Companies Master in Northern Ireland. The Bankruptcy and Companies Master directed that no new business should be issued, except without leave of the Court in exceptional circumstances.

We therefore urge our clients to seek advice in respect of other legal remedies prior to issuing a statutory demand. If you require any further information on this please contact either Katrina Gray or Kelly-Ann McAteer, from our recovery team in Northern Ireland.

 

E: katrina.gray@blmlaw.com
T: 028 9595 2515

E: kelly-ann.mcateer@blmlaw.com
T: 0289 595 2519

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Disclaimer: This document does not present a complete or comprehensive statement of the law, nor does it constitute legal advice. It is intended only to highlight issues that may be of interest to clients of BLM. Specialist legal advice should always be sought in any particular case.

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