A new report, the ‘red flag alert’ from leading corporate rescue and recovery company Begbies Traynor has warned that many UK companies are at risk of collapse as the tax man chases debt related to the COVID-19 pandemic. The report states that there has been a significant increase in the number of companies facing financial difficulties, with the number of indictors, which show significant financial distress, rising by over a third in the past year.
Need a second opinion on your insolvency litigation? Our specialist solicitors & barristers can help by assessing your case prospects and whether a winding-up petition is the right tool. We have highly experienced dual-qualified lawyers, so if our view is your case has limited merit or high risk we can advise you of the best strategy in our first meeting.
Businesses Being Forced to Close in UK
If a company has more than £5,000 in county court judgments (CCJs) or a winding-up petition against it, it is in critical financial difficulties. The number of CCJs served against companies increased by 52% year on year in the final quarter of last year. Winding-up petitions, increased by 131% from 2021, totaling 576. In the UK, 610,405 enterprises are classified as being in serious financial hardship, an increase of 4% from the previous year.
The report warns that the situation is likely to get worse as government support measures are rolled back, and that many companies may be forced to close permanently if they are unable to pay their debts. This is particularly concerning as the UK economy continues to struggle with the ongoing rising costs of living and higher energy bills.
The report notes that the situation is dire and calls on the government to take action to help these struggling companies. It suggests that the government should consider providing additional financial support to help these firms stay afloat and avoid collapse.
Industries Affected the Most
One of the sectors most affected by this trend is the sports, hospitality, and leisure industries. These industries have been hit hard by the pandemic and the resulting lockdowns, with many businesses forced to close their doors. This has led to a significant increase in the number of companies in these sectors facing financial distress.
In conclusion, the report from Begbies Traynor highlights the dire economic situation faced by many UK companies, particularly those in the sports, hospitality, and leisure sectors. With the tax man chasing COVID-19 related debts, many firms are at risk of collapse. The government must take action to provide additional support to these struggling companies if they hope to avoid permanent closures
How Can We Help you Oppose a Winding Up Petition?
Our specialist winding-up petition lawyers are experts in defending winding-up petitions. We can advise you as to the specific merits and demerits of your case and can assist you in opposing winding up petitions and negotiating with creditors. If your company has been issued a winding-up petition or statutory demand, you may be able to challenge that petition on the following grounds:
That the debt alleged in the statutory demand or petition to be owing is genuinely disputed on substantial grounds by your company; Your company has a genuine right of set-off against the creditor that exceeds the amount claimed in the statutory demand; or In certain other limited circumstances (for example such as jurisdiction, technical or procedural error or delay).
To oppose a winding-up petition, you will initially need to file a witness statement in opposition with the Court within five business days before the date when the petition will be heard by the Court (rule 7.16 of the Insolvency (England and Wales) Rules 2016). A copy of that witness statement will need to be provided to the petitioning creditor at least five business days before the hearing.
Your company is entitled to appear at the petition hearing so as to oppose the making of a winding-up order. It is a routine matter for companies to instruct solicitors and/or barristers to appear on their behalf at the hearing.
Check Your Insolvency Case ✔
We analyse your winding-up petition prospects. We deliver strategic legal advice at your first meeting. We get optimal legal results. Want a first or second opinion on your case? Click below or call our lawyers in London on ☎ 02071830529
WARNING – OBTAIN SPECIFIC GUIDANCE & ADVICE
The information on this website is not legal advice; you should always obtain specific advice on the circumstances of your case. Our Winding-up Petition Solicitors & Barristers provide specialist legal advice based on decades of expertise. Click here or call +442071830529 to get in touch. For regulatory reasons we do not take on low value cases nor provide free legal advice, information or guidance and our team cannot answer questions from non-clients.