Winding-up petitions Schedule 10
Paragraph 1 prevents the use of a statutory demand to bring a winding-up petition against a company, effectively voiding it. The provision applies to all statutory demands served between 1 March 2020 and 30 September 2020, and prevents them from forming the basis of a winding-up petition presented at any point after 27 April 2020.
	Paragraphs 2 and 3 prohibit (for registered and unregistered companies respectively) a petition from being presented against a company on the grounds that it is unable to pay its debts, unless the petitioner has reasonable grounds to believe that the inability to pay is not the result of COVID-19. The policy was announced on 25 April 2020 as taking effect from 27 April 2020.
	Paragraph 4 sets out that where a petition is presented in the period between the policy taking effect (on 27 April 2020) and before the Act being enacted and coming into force, but the above condition was not met, the court may make an order for the company’s position to be restored to what it would have been if the petition had not been made. This allows the court to undo any negative effects of winding-up petitions that are brought under the pre-existing law and may lead to the petitioner becoming liable for the cost of doing so.
	The official receiver is a statutory office holder and officer of the court who is required by law to investigate the company’s affairs when a winding-up order is made. Where the official receiver considers that a petition was presented in the above period and the above condition was not met, they must refer the matter to the court for it to determine whether an order should be made restoring the company’s position to what it would have been had the winding-up order not been made. There is no official receiver in Scotland and therefore the obligation to refer the matter to court has been given to the interim liquidator. That is the person who is first appointed liquidator when a winding-up order is made in Scotland.
	Paragraphs 5 and 6 prohibit a winding-up order from being made against a company on the grounds that it is unable to pay its debts unless the court is satisfied that the company would be unable to pay its debts even if coronavirus had not had a financial effect on the company.
	As a result of paragraph 7, any winding-up order that is made in the interim period between this policy taking effect on 27 April 2020, and the Act being enacted, is void if it does not meet the above requirement. Any actions taken by the official receiver, liquidator or provisional liquidator in respect of that order, however, will not make them liable in any civil or criminal proceedings. This is to protect insolvency office-holders who have taken actions that were required during the currency of the order, such as collecting in and selling company property. The court may direct the official receiver, liquidator, or provisional liquidator to take whatever action is necessary to restore the company to the position it was in prior to the petition being presented. Where the official receiver (or, in Scotland, interim liquidator) considers that an order is void due to this paragraph, and that it might be appropriate for the court to make directions, they must refer the matter to the court.
	Paragraphs 8 to 18 make provision for the adjustment of time limits in other provisions of the Insolvency Act 1986, where the winding-up petition was presented in the period between 27 April 2020 and 30 September 2020, and the court has wound up the company on the grounds that it is unable to pay its debts.
	The commencement of winding up will be from the date of the winding-up order, rather than the date that the petition was filed. This means that the petition will not prevent disposals of the company’s property (which are voided from the commencement of the winding up unless the court orders otherwise). As a result of the change, the company will not need to seek permission from the court to engage in its normal trading once a petition has been presented. The change also protects, for example, financial institutions who do business with the company, who due to the change in advertising of the petition (paragraph 19(2)) may not be aware that a petition has been made.
	When a winding-up order is made, certain transactions that the company entered into prior to winding up may be reversed for the benefit of its creditors and certain fraudulent behaviour prior to winding up can attract criminal liability. The Schedule adjusts the periods in which transactions can be overturned or possible fraudulent behaviour assessed (extending them backwards) to take account of the change in commencement date. This extension is limited to a maximum of six months.
	Paragraphs 19 and 20 make provision to modify the Insolvency Rules 2016, and in Scotland, Rules of Court, where a winding-up petition has been presented in the period between the day on which the Act is enacted and come into force and 30 September 2020. The Rules are, in summary, modified such that any requirements or permissions to provide notice of the petition or to publish it do not apply until the court has determined that it is likely to be able to make a winding-up order. The winding-up petition must contain a statement by the creditor that they consider the additional condition for the making of the winding-up order is met (i.e. that the company’s inability to pay its debts is not the result of COVID-19). The court does have power to give permission disapplying certain of these modifications.