Darren Bowman, Restructuring & Insolvency Partner at Baker Tilly Mooney Moore.
The reopening of the Bankruptcy and Companies Master’s Court to creditor winding up petitions will prompt the pursual of a significant number of struggling businesses in Northern Ireland, a Belfast Insolvency Practitioner has warned.
Guidance from the Bankruptcy and Companies Master released last month confirmed that creditors can present winding up petitions to the High Court from 17 April 2023, providing certain administrative criteria are met.
It follows the introduction of the Insolvency (Amendment) Rules (Northern Ireland) 2023 on 13 March 2023 that effectively ended the three-year restriction on creditor winding up petitions.
From 17 April, new winding up petitions may be presented by any creditor owed more than £750 by a company, provided certain criteria are met including that the petition is grounded on a formal demand made on or after 13 March 2023 that originated from a court judgement, decree, or other similar court order.
Insolvency Practitioner Darren Bowman, a Partner at Belfast accountancy and advisory practice Baker Tilly Mooney Moore said the movement will bring about an increase in the number of winding up petitions, both relating to ‘zombie’ companies as well as many other businesses facing a period of financial distress.
As the creditor petition process returns to normal, he adds that business owners will be best placed to examine the flow of cash within their business, investigate their liabilities and seek expert advice if they are struggling.
Darren Bowman, Restructuring & Insolvency Partner at Baker Tilly Mooney Moore said:
“The reopening of the High Court to creditors’ winding up petitions is an expected development that represents another step towards normal insolvency practices following the disruption of Covid-19. What businesses need to know now is that as creditors reclaim the mechanism of winding up petitions, there are fewer safeguards and protections in place before the initiation of formal insolvency proceedings.”
“That said, many rescue and recovery options are available including Company Voluntary Arrangements, which are a credible and formal way to getting a business back on track while repaying creditors. In Northern Ireland, there is a wealth of locally accessible advice on debt and insolvency issues and many mechanisms to restore business value and viability exist and should be explored fully. With the insolvency court now open to creditors winding up petitions, businesses should assess their liabilities and seek urgent, expert advice if under financial stress.”