Winding up Petition Season is Coming

The winding up petition season is coming soon. A large section of the SME sector of the UK economy is insolvent. In the modern economy, this has never happened before. Can anyone possibly imagine one million winding up petitions being served  at once. In normal times 800 companies face winding up petitions each month. Now there are 100 times more insolvent companies than in normal times.

Of course there will not be a million winding up petitions issued but there may be an average years worth presented in the last six months of 2021. According to the Orian think tank, that is the expected figure.

Depression Avoided

So if those predictions are correct, then there will still be at least a million SME businesses still trading illegally, technically. The UK Government wants to avoid chaos beyond the pandemic and will stretch national resources and insolvency laws to accommodate these exceptional times. The winding up petition season is coming but thankfully, not with the potential force expected.

Credit Scores

There are many options that the Government can choose from. The most compelling, again according to the Orian think tank is for the Government to regulate the credit agencies to create a “COVID” statement on company’s credit files, where there is Covid debt. The COVID statement would not reduce the credit rating but would be a debt acknowledgement. It is believed that, given the level of corporate COVID debt nationally, the companies with these statements would not suffer credit downgrading.

National Repayments

In conjunction with the COVID statements there could be national COVID repayment programme whereby as long as 10% of the debt is repaid every year, without interest, the insolvent companies could carry on trading. This would require a national database – yet another!

Insolvencies Managed

There is one thing for certain, the SME sector will thrive. The UK Government will need to provide further financial assistance to companies, post pandemic.  Britain depends on it. Call Directors Circle on 0333 050 8518 if you wish to talk through any corporate financial difficulties.