Statutory demands and winding up orders served on travel companies during the Covid-19 crisis will be void, according to a new law that has been fast-tracked through parliament.

Speaking on a Travel Weekly webcast, Krystene Bousfield, a solicitor at travel law specialists, Travlaw, explained that the Corporate Insolvency and Governance Act came into force last week.

She said: “Basically, it’s been brought in to try and support struggling businesses as they cope with the repercussions of Covid-19.  We’ve seen massive implications, not just in the travel industry but throughout the whole economy, and this act has been brought in to try and help businesses through that.”

She said it could help the travel industry in two ways.

“If a statutory demand has been served on a company between March 1 and September 30 this year, it’s void. So if you receive a statutory demand data between those dates, it doesn’t count for anything,” Bousfield said.

But she advised: “You should still acknowledge it, definitely. Because if you’re receiving a stat[utory] demand, something has clearly gone wrong, so you should still acknowledge it, but it doesn’t apply; it doesn’t have any standing – and that’s law.”

Bousfield said the act would also guard against most winding up petitions.

“With winding up petitions, it’s not quite a blanket a ban but, basically, if the winding up petition is presented after April 27, the court will very much consider the impact Covid-19 has had on that business and why the winding up proceedings are being issued,” she said.

“There’s various ways a court will look at it. They’ll look at your balance sheet and whether you are able to pay your debts. If you can prove Covid-19 has had a negative financial impact on your company and the only reason you find yourself in this position is as a result of Covid-19, the winding up proceedings will not be granted, they will not proceed.”

Bousfield said the bill had gone through Parliament and been approved “very, very quickly”.

“And that’s because of the implications on our economy,” she said. “This is some great news and some really positive steps for anyone in travel who’s worried about receiving these sorts of demands or threats.”

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