By Rob Adamson, Restructuring and Insolvency Partner, Armstrong Watson LLP

The suspension of winding up petitions and statutory demands is coming to an end, so with effect from 1 October 2021, it is anticipated that there will be an increase in creditor enforcement action.

The withdrawal of the remaining Government support will potentially result in an upturn in the need for businesses to seek the right advice.

Threats of legal action

Business owners should be mindful that if an outstanding County Court Judgement (CCJ) remains unsatisfied (either in whole or in part) by the end of September, then there is a risk that the CCJ can be enforced. This can either be by a High Court Enforcement Officer obtaining a warrant to take control of your goods, or it can result in a winding up petition being issued for non-payment of the debt.

Creditor pressure can take many different forms

Creditors will be looking to take action to improve their own position with your account if you have outstanding payments. One example would be suppliers trying to recover their goods. Your bank may also start to reduce your overdraft limit or, where there is an invoice finance facility in place, they may look at limiting the amount you are able to draw down.

Protection from creditors

There are steps you can take to manage the position, starting with seeking advice from a licensed insolvency practitioner.

Depending upon the severity of the creditor pressure and the reason(s) for the predicament in which you now find your business, there are different options available to you. A moratorium can be obtained if there is a possibility of a turnaround of the company, which offers protection to the business whilst the turnaround is being effected.

A Company Voluntary Arrangement (CVA) can be used to rescue the business if the company needs to compromise its debts but if the rescue is being hampered by extreme creditor pressure, then an Administration appointment has an automatic moratorium, offering additional protection for the assets.

If creditor pressure is increasing, seek advice sooner rather than later – whilst there are lots of different options available. The more pressure there is on the business, the less time you may have to facilitate a turnaround, which reduces the options available.

If you would like further information, please contact Rob Adamson on 01132 211336 or email