Lancashire businesses must talk to creditors about rent debts, expert says

A Lancashire insolvency expert is urging businesses with rent arrears or unpaid debts to seek urgent advice following a change in the rules on winding up petitions.

By Tim Gavell
Saturday, 9th April 2022, 4:55 am

Since April 1, companies can face a winding-up petition for debts of just £750 following the expiry of temporary legislation during the pandemic which had set the threshold at £10,000.

Commercial landlords can now also pursue companies for unpaid rent after restrictions preventing them from issuing winding-up petitions ended on March 26.

Allan Cadman, North West chairman of the insolvency and restructuring trade body R3, says the changes could result in distressed businesses facing action from their creditors unless they come to an agreement on debts.

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R3 North West chairman Allan Cadman

He said: “Now, more than ever, it’s critical that company directors seek advice if they’re worried about their businesses or concerned about their ability to pay staff, landlords or suppliers. If they don’t, they could face the financial, operational and emotional effects of contesting winding-up petitions in court over a debt of £750.”

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Allan, who is also a partner with insolvency firm Poppleton and Appleby, said rent was typically one of a business’s largest expenses – especially in the retail and service sectors - and directors may have found the amount they owe has increased if the pandemic has affected their ability to trade.

He added: “Over the past two years we have seen a number of instances where creditors have recognised that that engagement leads to better outcomes then enforcement. Many creditors appreciate the climate that businesses are operating in and are willing to have a conversation about how and when they can be paid.”