The Corporate Insolvency and Governance Act 2020 (Coronavirus) (Amendment of Schedule 11) Regulations (Northern Ireland) 2021

EXPLANATORY NOTE

(This note is not part of the Regulations)

These Regulations substitute a new Schedule 11 to the Corporate Insolvency and Governance Act 2020 (c.12) (“CIGA”).

The Insolvency (Northern Ireland) Order 1989 (S.I. 1989/2405 (N.I. 19)) (“the 1989 Order”) specifies the grounds upon which registered and unregistered companies may be wound-up by the High Court. One of those grounds is that the company is unable to pay its debts. Article 103 (or, in the case of an unregistered company, Articles 186 to 188) of the 1989 Order specify those cases where a company is deemed to be unable to pay its debts.

As originally enacted Schedule 11 to CIGA prohibited the winding-up of a company where it would otherwise have been deemed unable to pay its debts as a result of an unpaid statutory demand, and restricted the winding-up of a company by a creditor in any of the other cases specified in the 1989 Order, where the company’s inability to pay its debts was due to the financial effect of coronavirus.

Regulation 2 substitutes a new Schedule 11 to CIGA. Paragraph 1 of that Schedule provides that a winding-up petition may not be presented by a creditor on the grounds that a company is unable to pay its debts unless certain conditions are met. The first condition is that the debt is for a liquidated amount which has fallen due for payment and does not relate to non-payment of rent under a business tenancy. The second condition is that the creditor has made a formal request to the company seeking proposals for the payment of the debt. The third condition is that the company has not made a proposal that is to the creditor’s satisfaction within 21 days beginning with the day the formal request was delivered. The final condition is that the debt is £10,000 or more, or, where the petition relates to two or more debts, the total amount of all of the debts taken together is £10,000 or more. The Court has the power to waive the requirement for creditors to serve a formal request seeking proposals for payment of the debt or to shorten the period within which such proposals are to be submitted.

Paragraphs (4), (5) and (6) of paragraph 1 of the new Schedule 11 set out requirements as to the content and delivery of the formal request to the company seeking proposal for payment of the debt.

Paragraph 2 introduces a substitute for Form 4.02 in Schedule 2 to the Insolvency Rules (Northern Ireland) 1991 (S.R. (N.I.) 1991/364) to be used when presenting a winding-up petition on the grounds of insolvency.

Paragraph 3 provides that the new Schedule 11 only applies in respect of winding-up petitions that are presented by a creditor between 1st October 2021 and 31st March 2022. Paragraph 4 provides that the new Schedule 11 has effect as if it were included in Part 5 of the 1989 Order.

Regulation 3 makes a consequential amendment to section 42 of CIGA. That section enables the Department to extend or curtail the duration of various temporary provisions in CIGA, including Schedule 11 to that Act. As a result of the amendments made by regulation 2 of these Regulations the power given by section 42 may no longer be exercised in relation to Schedule 11. Regulation 3 therefore amends section 42 to remove the reference to Schedule 11.

An impact assessment has not been produced for this instrument. An explanatory memorandum has been published alongside this instrument at www.legislation.gov.uk.