Ghost Winding up Petitions

You can’t see them but you know they are there.  These were the false starts at the beginning of the pandemic when the Covid-19 virus hit our shores.

The number of winding up petitions issued in October 2019, just in the London Court, was around  470. This included  315  HMRC petitions.  One year on, October 2020 saw a total of 19 visible Petitions in the London Court. There were no HMRC Petitions issued. The visible winding up petitions that were issued were mainly from factoring companies and building material suppliers.

When the UK realised the severity of Covid-19, HMRC ceased to issue petitions after the 18th of March, apart from in exceptional circumstances. The majority of issued HMRC petitions were dismissed and shelved. These shelved winding up petitions, along with a long list of potential targets that have built up during and in between the two lockdowns, are the ghost petitions.

So when will we see the ghost winding up petitions?

The answer is probably three months after a full vaccination of the UK population. So the ghost winding up petitions will probably make themselves known by June 2021. There are probably around 3,000 ghost HMRC petitions that could be issued around June 2021. As HMRC uses mainly the London Court, they would have to use additional Chancery Courts such as Leeds and Birmingham to spread the load.

Many potential petitioning creditors, such as local councils have also held off issuing petitions.  The second half of 2021 could see the same number of petitions being issued as seen in the whole of 2018 and 2019.

Looking at the much bigger picture, the number of directors that will just walk away from their businesses will probably be ten times that of the 2021 petitions, around 200,000. This is the secondary fallout of Covid-19 after all the tragic and unnecessary deaths.