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Covid winding up restrictions eased

Running Your Business

Covid winding up restrictions eased

In a bid to support viable businesses during the pandemic, the UK Government introduced temporary restrictions on the use of statutory demands and winding-up petitions. These expired on 30 September 2021 and were replaced with more limited restrictions until 31 March 2022.

Schedule 10 to the Corporate Insolvency and Governance Act 2020 (“CIGA”) prohibited the winding up of a company where the company’s inability to pay its debts was due to the financial effect of coronavirus. Insolvency statistics for this period have shown that very few creditors made use of the winding up court procedure due to the costs and burden of establishing that coronavirus had not had a financial effect on the debtor’s business to some extent.

Accordingly, this provided some valuable protection and breathing space to businesses. However, these restrictions inevitably frustrated creditors, who were struggling to maintain their own cash flow and had little recourse for unpaid debts. 


Introduced on 1 October 2021, the Corporate Insolvency and Governance Act 2020 (Coronavirus) (Amendment of Schedule 10 Regulations 2021) (the “Regulations”) mean that a creditor can once again rely on an unpaid statutory demand to apply to the court for a winding-up petition. 

However, several conditions need to be met by the creditor. These are:

  1. The debt must be for a liquidated sum that is due and payable and does not relate to unpaid rent or other sums due under a commercial lease, unless the creditor can prove that non-payment is not related to the pandemic
  2. The creditor has given the prescribed formal notice (often called the Schedule 10 Notice) to the debtor of its intention to present a winding-up petition unless satisfactory payment proposals are received within 21 days
  3. At the end of this 21-day period, the debtor has not made a proposal for payment of the debt that is to the creditor’s satisfaction
  4. The creditor is owed £10,000 or more (an increase from the original threshold of £750), based on the debtor’s inability to pay debts.

The Schedule 10 Notice is the most novel feature of this partial lifting. Whilst there is no prescribed form for it, the Regulations dictate that it must contain certain information, including a statement that the creditor is seeking the debtor’s proposals for payment of the debt and that if the debtor has not made a proposal that is to the creditor’s satisfaction within 21 days, the creditor intends to present a winding-up petition.

If a creditor is anticipating relying on a statutory demand to establish the debtor’s inability to pay, the Schedule 10 Notice can be (but is not required to be) served at the same time. This can, practically, be the simplest option as then the two 21-day periods prescribed by the statutory demand and Schedule 10 Notice run concurrently. 

In practice, if your business occupies a pharmacy under a commercial lease or if you are a landlord to the lease of a pharmacy, a creditor is still unable to present a winding-up petition against a company for a debt that relates to unpaid rent or other sums due under a commercial lease.  

If your business is owed £10,000 or more by a company and attempts to obtain payment have not been successful, the ability to serve a statutory demand and threaten winding-up proceedings can, at the very least, be a valuable negotiation tactic. Any statutory demand and Schedule 10 Notice should be properly prepared and legal advice obtained as a faulty demand can be fateful to any application for a winding-up order. 


If you have been served with a statutory demand and Schedule 10 Notice by a creditor (for example, a supplier), you should take it seriously and seek legal advice as a matter of urgency. 

The receipt of a statutory demand or Schedule 10 Notice is not necessarily a fait accompli for your business, but it is important to act efficiently and proactively as there will likely be an immediate impact. 

For example, once a winding-up petition has been advertised (as required by the Insolvency (England and Wales) Rules 2016), a bank is likely to freeze a company’s bank account, in part because any movement of money in or out of the account could be reversed by the court or any future liquidator. 

This means that your pharmacy may be left unable to pay critical operational costs, such as staff salaries. A company can apply for a validation order to unfreeze its bank accounts, but the court would require a substantial amount of evidence to allow this to happen. 

The above is a general overview and we recommend that independent legal advice is sought for your specific concerns.

Melania Constable ( and Georgina O'Sullivan ( are solicitors in the corporate restructuring and insolvency team at Charles Russell Speechlys LLP 

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