Lords consideration of the Corporate Insolvency and Governance Act 2020 (Coronavirus) (Extension of the Relevant Period) (No. 2) Regulations 2020 - Jan 19

Wednesday, 20 January 2021 09:21

Corporate Insolvency and Governance Act 2020 (Coronavirus) (Extension of the Relevant Period) (No. 2) Regulations 2020

Considered in Grand Committee

14:31:00

Moved by

Lord Callanan
That the Grand Committee do consider the Corporate Insolvency and Governance Act 2020 (Coronavirus) (Extension of the Relevant Period) (No. 2) Regulations 2020.

Relevant document: 40th Report from the Secondary Legislation Scrutiny Committee

The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)
My Lords, since the emergence of Covid-19, the Government have been swift to act and provide businesses with help and support to give them every chance to survive and get through this difficult period of uncertainty. Since March last year, businesses have benefited from an unprecedented package of government support targeted at saving jobs and livelihoods, such as the furlough and job retention schemes, as well as billions of pounds in loans, rates relief, tax deferrals and grants.

Today, all areas of Great Britain are again subject to restrictions put in place to limit the spread of the virus and to help save lives. These restrictions are crucial to prevent our NHS from being overwhelmed and we wait for everyone to be vaccinated. But until life returns to normal, we have to recognise that the impact on business is severe and continuing. The adverse effects that these essential restrictions continue to have on many businesses, particularly those in the retail and hospitality sectors, have been well documented and well debated in our House. Once again, the Government have acted quickly following the introduction of the latest national restrictions, with a new £4.6 billion package of lockdown grants to support businesses and to help protect jobs.

These regulations, which were laid before the House on 9 December 2020, will continue to help companies by extending the temporary suspension on using statutory demands to wind up companies and other restrictions on company winding-up petitions to 31 March 2021. First introduced by the Corporate Insolvency and Governance Act 2020, these measures were extended from the end of September 2020 by order to 31 December and this instrument seeks to extend them further. The measures, like others in that Act, are aimed at supporting directors in guiding their companies through the period in which business is being affected by the current pandemic. Since their introduction in March last year, these temporary measures have helped to protect many viable companies from aggressive creditor enforcement during unprecedented trading conditions.

The temporary restrictions on company winding-up petitions that the regulations seek to extend mean that a petitioner must satisfy a court that any debts are not Covid-19 related. In this way, companies that would be viable but for the effects of the virus will not face action from creditors seeking to wind them up because they have been unable to pay their debts due to the trading restrictions that have been necessary to protect our citizens and the National Health Service. This extension will further help to support companies while national restrictions continue to affect the trading capability of many of our businesses.

While these measures are intended to help companies that may be subject to aggressive creditor enforcement, the Government have been clear that they are not to be seen as a payment holiday. Where companies can pay their debts, they should, of course, do so. It is important to note that these measures aim to encourage forbearance and do not extinguish any existing creditor rights or interests.

In addition to the protection that this measure gives, it is also intended to give those companies with unavoidable accrued arrears caused by the pandemic time to take advice from restructuring professionals and to negotiate and reach agreements with their creditors wherever that is possible. I know that many companies have done so successfully and I am grateful to them, but I urge others to do so and to plan for the post-Covid future with confidence.

I know that many businesses and their business representatives will welcome the continued support that these regulations will give them during this very uncertain time. But I also recognise that these measures will mean a further period of uncertainty for creditors where their rights to enforce recovery of their debts are temporarily suspended. The Government continue to ask for forbearance in allowing people and businesses to meet their debt obligations during these difficult and unprecedented times. As I said, these measures do not extinguish any existing rights or interests. Instead, they temporarily remove one mechanism for enforcing a debt and therefore provide additional protection to companies in distress as a result of the virus. A variety of other debt enforcement methods will remain. We think it is right, therefore, that any consideration of an extension and for how long should be done on an individual basis, rather than in the round, considering all the circumstances and potential impacts.

In conclusion, we do not take this action lightly and we will review carefully before taking any further decisions when this extension period expires at the end of March. Therefore, I commend these regulations to the House and I beg to move.

The Deputy Chairman of Committees (Baroness Healy of Primrose Hill) (Lab)
I inform the Committee that the clock is not working currently and remind them that speeches are limited to six minutes. I call the next speaker, the noble Lord, Lord Sikka.

14:36:00

Lord Sikka (Lab) [V]
My Lords, I thank the noble Lord, Lord Callanan, for his speech. I am certain that there is widespread support for extending the duration of temporary measures to protect businesses from insolvency proceedings during this Covid emergency. However, these measures cannot be extended indefinitely and businesses face the prospect of a cliff edge, leading to a flood of insolvencies, job losses and damage to the supply chain. When the temporary prohibition on issuing statutory demands and winding-up petitions ends, many businesses will face pressure to pay creditors. Failure to pay will lead inevitably to further insolvencies.

The Government need to bring forward plans for long-term financial support to help businesses to navigate the post-Covid era. Many small businesses are particularly affected; the Federation of Small Businesses estimates that 250,000 SMEs are at risk. They cannot easily get trade credit insurance and will also be hard hit by the bankruptcy of their major corporate customers.

As part of the support for businesses, the Government also need to reform insolvency laws. These enable secured creditors, usually financial institutions, to walk away with most of the proceeds from the sale of a bankrupt business’s assets and leave very little for unsecured creditors. Such arrangements ensure that the risks of insolvency are not equitably shared between secured and unsecured creditors. There is no economic or moral justification for this. Banks and financial institutions hold diversified portfolios and therefore have a greater capacity to manage risks. In contrast, SMEs rely on comparatively fewer customers and have a much lower capacity to absorb risks arising from the bankruptcy of their major customers. A risk management perspective would recommend changes in insolvency laws.

Before Covid, unsecured creditors were taking a hit of around £4 billion a year and that is now bound to increase. This can be mitigated by reforming the risk-sharing arrangements. I would suggest that 30% to 40% of the proceeds from the sale of a bankrupt business’s assets should be ring-fenced for distribution to unsecured creditors, thus ensuring that they make a substantial recovery which would enable them to survive.

We also need to look at the current regulatory arrangements for the world of insolvency. Too many insolvencies last far too long and enable insolvency practitioners to milk the liquidations. Higher fees for insolvency practitioners would reduce the amounts that are available to unsecured creditors.

On 27 October, in response to a Written Question, I was told that there are 14,328 liquidations of businesses that began 15 years ago but are still not completed. None of the insolvency regulators show any concern for such a state of affairs. Meanwhile, insolvency practitioners continue to collect mega fees. Here are some examples. For Comet’s liquidation, Deloitte was charging out its partners at a rate of £1,160 an hour, and the cheapest grade of labour was charged out at £370 an hour. PricewaterhouseCoopers is a special manager assisting the official receiver in the liquidation of Carillion. It expects to make £100 million from fees, and the partners are being charged out at a rate of £1,156 an hour. At the House of Fraser administration, Ernst & Young is charging out its partners at a rate of £1,650 an hour, and the trainees are being charged out at £250 an hour. KPMG has recently been appointed administrator to Intu Properties, and its partners are being charged out at £920 an hour. Such charges harm the interests of unsecured creditors. The Government must really take steps to end this abuse.

To sum up, can the Government provide long-term plans to support businesses in the period after the end of the current temporary measures? I hope the Minister agrees that the unsecured creditors deserve a better deal. This can be done by ring-fencing some of the proceeds from the sale of the bankrupt businesses and by ending the excessive fees charged by insolvency practitioners.

14:42:00

Lord Bourne of Aberystwyth (Con) [V]
My Lords, it is a pleasure to follow the noble Lord, Lord Sikka, who raised some very interesting points about insolvency law in general which I think are worthy of examination. I thank my noble friend the Minister for introducing these regulations, which are of course relatively familiar to us by now. I also thank my noble friend for what the Government have been doing in many areas to help alleviate the economic pressures that have been caused by the pandemic—I think particularly of the business rates holiday for retail, and I urge the Minister to consider with colleagues its continuation after the end of this financial year.

These regulations form part of a series that we have looked at under the Corporate Insolvency and Governance Act 2020, which was, of course, passed in June of last year—so some time ago now. I note in passing that we are renewing various aspects of the Act but on different timescales. I ask my noble friend why that is. As it seems extremely likely that we will be asked to renew these again, could we not do so on the same timescale and not have to see these things separately, given that they hang together? The provisions here on wrongful trading, which are due to end in April, will, I presume, then be subject to renewal. Can we look at these things in the round together?

Like many others, I welcome these regulations. The Explanatory Memorandum talks of a “breathing space” for business—it actually talks, I think erroneously, of a “briefing” space for business; unless that refers to communications policy, I think it means breathing space. The regulations are widely welcomed for that reason, and they do indeed provide that breathing space.

However, I am concerned about how temporary these provisions are, a point made by the noble Lord, Lord Sikka. We are coming up now to nine months of these provisions. If, as I suspect, we are asked to renew them again, that will be a year. This is not just a concern about us being asked repeatedly to renew them, because I can see the sense of that, but there is a balance of convenience here. These regulations help some businesses by preventing aggressive creditor action, but there are creditors with quite legitimate debts who are feeling the pressures of the pandemic too, and they are not able to use the normal tools of enforcing those debts while these regulations are in place.

The Explanatory Memorandum says that the Government have assessed the impact of these regulations and whether it is appropriate, because of that balance of convenience, to continue with them. Can my noble friend explain how that impact assessment has been made, so that we can examine it? There is, as I say, a concern for some businesses, which will find life difficult because they are unable to use these tools because of the suspension of some of the rights to enforce those debts.

The regulations refer repeatedly to the point that these are indeed temporary measures, and therefore no full impact assessment needs to be made. I am beginning to question that. If these regulations are going to be repeatedly renewed, then they are not really temporary at all. At what stage does my noble friend think we should regard these as more permanent?

I have one other point to make, relating to the preferential status of HMRC. This was restored in December of last year, giving HMRC, as it were, the right to leap-frog as a creditor. I appreciate that HMRC will be in the same position as other creditors, but R3, the insolvency and restructuring trade body—which I thank for its briefing—notes that HMRC has a key role to play as a creditor in most insolvencies and that it could take proactive measures to help provide assistance. That would be a very sensible move in relation to what is obviously a challenging economic position that is likely to continue for some time. Subject to those considerations, I certainly lend these regulations my support.

14:47:00

Baroness Jones of Moulsecoomb (GP) [V]
My Lords, I am well aware that the Government have helped a lot of small and medium-sized businesses, which I care very much about, and this is a good idea; these regulations need extending. However, it seems obvious, as the noble Lord, Lord Sikka, said, that there is going to be a cliff edge at some point. I am curious about how the Government think they are going to deal with that when it happens. Are these regulations going to be tweaked again, or is there really a long-term plan? I realise that it is difficult and that many businesses will continue to struggle and fail.

I want to ask about a point that the noble Lord, Lord Bourne, made about HMRC and its new status as a preferential creditor. If it is going to play an active and supportive role in insolvency proceedings, does that mean that there are going to be more staff? Will it be able to support viable restructuring proposals so that businesses and jobs could be saved? It would be good to explore the opportunities that HMRC might have.

Unfortunately, I have more questions than I have answers or recommendations on this issue. I would appreciate answers, if at all possible—in a letter would be absolutely fine. On HMRC, how will bottlenecks be addressed? Of course, when insolvency measures are not having a break any more, there will be a bunch of businesses that will go out of business. How will the Government address those bottlenecks?

Are the Government aware that they should be adding climate and ecological considerations to their long- term insolvency planning? Environmentally sustainable businesses should be supported wherever possible: if the Government are to achieve their net-zero carbon target by 2050, they will need companies which understand how to achieve this and how to cut their carbon emissions. On the contrary, environmentally damaging businesses should not be helped in the same way but should be dissolved or restructured with advice to remove the damaging elements of the business. I wonder whether this is taken into consideration by the Government. Obviously, I really would like to help, and that is an area where I could probably make some positive suggestions.

14:50:00

Baroness McIntosh of Pickering (Con) [V]
My Lords, I am delighted to follow the noble Baroness, Lady Jones, and contribute to this short debate on the regulations. I thank my noble friend the Minister for bringing forward the extension, as set out in the regulations, and for presenting it in such a clear and concise way. There is much in the regulations to commend.

I pay tribute to the Government for their generous support, as set out by my noble friend. He referred in particular to the retail and hospitality sectors. I became more familiar with the contribution of the night-time economy to both the London economy and that of the wider UK, in other major cities across the four nations, through the ad hoc committee report in your Lordships’ House on the Licensing Act 2003. At its height in 2019, the night-time economy contributed billions to the UK economy. As my noble friend set out, together with retail and hospitality, the wider night-time economy includes those who advise, PR people and all sorts of managers and so on—it is a much wider industry than it might appear at first, and they are very much in sight when we come to consider the regulations.

Like others, I will focus my questions on the Government’s exit strategy. I entirely support the regulations and the extension to 31 March, which will protect companies and ensure their longer-term viability, and that the focus will be on the petitioner to establish in court that any debt incurred is not Covid related. I accept that this is a payment holiday and, as my noble friend said, that the debt must be repaid at once, in so far as it can be.

I want to highlight the new role played by HMRC, as other noble Lords have referred to. To what extent will BEIS and my noble friend work with the Treasury and HMRC to ensure that they adopt a more supportive approach to businesses? That will help to ease the restructuring of those businesses facing potential insolvency and also, as HMRC is a key creditor, it is in its interests to keep such companies solvent. An even more beneficial effect could come from reducing the fees currently earned, as set out by the noble Lord, Lord Sikka.

We are assuming, as my noble friend Lord Bourne set out, that we will extend this protection beyond 31 March, but that it will at some point come to end. To what extent is my noble friend mindful of that? What protections or balance do the Government intend to put in place at that time?

These regulations are extremely important at this time and could protect many businesses, many of which are major employers, enabling them to remain in business and allowing them to restructure within the three-month period.

14:54:00

Baroness Ritchie of Downpatrick (Non-Afl) [V]
My Lords, it is always a pleasure to follow the noble Baroness, Lady McIntosh of Pickering. I thank the Minister for his explanation of these regulations, which simply prolong the period in which the temporary provisions that restrict the issuing of winding-up petitions under the Corporate Insolvency and Governance Act are to have effect to 31 March 2021.

While the regulations are welcome, like the noble Baroness, Lady McIntosh of Pickering, I wonder about the Government’s exit strategy and the need to support companies that have had to endure—along with their management and employees—severe restrictions as a result of the Covid pandemic. This was raised during the passage of the Bill, and the debate on subsequent regulations, because of the nature of the pandemic, the need to bear down on infection rates, and the problems faced by many businesses in such a difficult trading environment. Therefore, why not extend for a longer period, as lockdown could last for a significant time, given the concerns around the level of transmission of the new variant of Covid.? I fully appreciate that there is a balance to be struck between having an exit strategy and protecting companies from insolvency.

Unfortunately, we are discussing this statutory instrument in retrospect, because of the nature of the pandemic—it came into force on the 31 December. However, is there not a better, more effective system, whereby we can debate and affirm such statutory instruments before they come into effect, to ensure greater accountability?

The noble Lord, Lord Bourne of Aberystwyth, referred to the briefing we received from R3. It suggests that a key way for the Government to help manage the process is the invocation of HMRC to take an engaged and supportive approach in its role as a creditor in most insolvencies. With its new preferential status, HMRC’s support as a creditor will be required to ensure that viable restructuring proposals can be agreed—proposals that could potentially save thousands of jobs and businesses as the UK adjusts to a post-Covid environment next year.

As the noble Baroness, Lady McIntosh of Pickering, said, there are other issues. There needs to be a multi-departmental approach across BEIS, the Treasury and HMRC to address the regeneration of our high streets, where many of these businesses are located. What discussions have taken place about a root and branch review of the business rates system, the continued freezing of commercial rates, an underpinning and pump-priming of our high streets, the extension of the Towns Fund beyond 101 locations and the expansion of business improvement districts? All these measures would help pump-prime and underpin not only retail but our wider business environment, which has had to endure the impact of Covid and the consequential financial restrictions, and a loss of income. In many instances, independent retailers and small businesses have had to compete with those much larger businesses that are currently operating, such as the large supermarkets—but they cannot compete because, in most instances, they are not allowed to.

So I hope the Minister can provide some answers today; if not, I hope he can provide some answers to me in writing.

14:58:00

Lord Razzall (LD) [V]
My Lords, like other speakers, I support these regulations, but I will touch on three points, two of which have been touched on by earlier speakers.

I note that no impact or economic assessment has been made of the effect of the regulations since they were brought in in the summer. Do the Government have any idea of how many liquidations have been postponed under these regulations and their predecessors? Presumably someone could look at how many liquidations took place in an equivalent period before Covid and at how many have not occurred since. I have no idea of the magnitude of the issue we will face once these regulations come to an end—which actually brings me to my second point.

A number of noble Lords indicated their concern that we must not get to the position, when these regulations end, where companies simply fall off a cliff into liquidation. Clearly, the Government must have given some thought to what is likely to happen, and it will be very helpful if the Minister, although not wanting to be pinned down on that, can give us some indication of the Government’s thinking. As other noble Lords have said, the lobbying organisation has suggested that HMRC should be invoked to help a soft landing, but I should welcome the Minister’s comments on whether further thought has been given to how we have a soft landing.

My third point is technical. As the noble Lord, Lord Bourne, said, it is not just the threat of being wound up that keeps company directors awake at night; it is also the question of protection from charges of wrongful trading. This was recognised by the Government in providing protection against both liquidation and unlawful trading until 30 September, but, unfortunately, although the winding-up suspension was extended to 31 December—and now further by these regulations—the wrongful trading protection was not extended at the same time, and made effective only from 26 November last year. I cannot believe this was deliberate, but was presumably an oversight, but it means that, theoretically, directors could be liable for wrongful trading from 30 September to 26 November last year. Can the Minister please confirm that directors will have protection for their actions during that period?

15:01:00

Lord Stevenson of Balmacara (Lab) [V]
My Lords, I start by thanking the Minister for introducing the SI this afternoon in his usual calm and unflustered way and for getting across the main points, for which we are always very grateful.

This has been a good debate and has raised much wider issues than perhaps might have been expected, because these are continuations of a continuation, and because of the concern expressed by a number of speakers that, as time moves on, we are moving into a situation where the temporary becomes permanent, and the implications of that.

We all recognise the points made by my noble friend Lord Sikka on the need to look more widely at insolvency issues as a result of some of our experiences in the Covid pandemic, but these issues were there beforehand. I should be grateful if, when he comes to respond, the Minister could give us more of a timetable for when and if we will look again at insolvency issues, because there are some substantial ones to be addressed—not least the question of the priority of secured creditors, but also of HMRC as a preferential creditor, which I shall come back to.

The noble Lord, Lord Bourne, made some interesting points about whether we should be expecting an impact statement at some point, but what we are looking for is a little broader. It is whether these proposals, which have been coming through in dribs and drabs, arising from the founding legislation, are having the effect we want: if they are, how much, and, if not, what are the implications? There is no criticism here of the Government’s approach to what we are dealing with; they have done all they can in the time available to do it, and we should always acknowledge that. However, as the noble Lord said, as time goes on, we begin to wonder whether we are heading in the right direction and, if so, how and in what form we could review that without in any sense jeopardising where we are.

Other speakers have drawn attention to a wider range of things, including the impact all these proposals are having on the high street and the future of retail. These are issues that probably would not have become as exposed as they are without this pandemic, but we will have to address them.

We should also be very careful about the point made by the noble Baroness, Lady Jones, who I think put her finger on it. If HMRC is to have an engaged and supportive approach to insolvency in its capacity as a preferential creditor, is it actually structured in a way which will allow that to happen for the benefit of UK plc? At a very crude level, HMRC is there to make sure that we, the taxpayer, pay our taxes and pay them promptly. We have had a change, in some senses, with the new breathing space proposals coming forward for personal creditors—those suffering unmanageable debt—and that is to be welcomed, but I wonder whether the Minister will speculate a little about any changes that might be necessary to HMRC’s founding principles if it is to take up this role as our green saviour, and our saviour of particular jobs and industries that we want preferred and supported as we come into the recovery phase. What exactly are the expectations here on HMRC? I do not quite recognise where we might be heading, given how HMRC is currently established and operates.

I have only one other point, to which I do not think there is an easy answer but which I should be grateful if the Minister would reflect on and perhaps write to me about, if necessary. The issue that comes forward out of all this is whether we can reasonably expect a petitioner to be able to satisfy a court—which is obviously a very high standard of requirement—that the company’s inability to pay is, as the Explanatory Memorandum says,

“not due to coronavirus”.

I am here grappling with the difficulty of proving a negative. How and in what form can a petitioner prove that, in a situation where a creditor could be the Inland Revenue but is more likely to be the banks, and they are putting forward a case for recovery of money outstanding to them? Exactly what will the nature of the evidence be, given the ongoing nature of the coronavirus, that will be crucial for the court to determine that such an inability to pay is indeed “due”—which is a very strict term—to the coronavirus? I do not think there is an easy answer to that, and I am not expecting one from the Minister, but perhaps, when he has had time to reflect on it, he could write to me about that.

This has been a good debate and I look forward to hearing the Minister’s response. We do not object to the extension of the SI.

15:07:00

Lord Callanan (Con)
Let me first thank all noble Lords who contributed to this debate. I thought it was an excellent discussion and the points raised have highlighted the importance of the measures being extended by these regulations and the necessity we feel for extending them so that businesses can continue to benefit from them.

Since the emergence of Covid-19, businesses have continued to face an exceptionally challenging time, with many unable to trade, or their ability to trade at full capacity restricted due to social distancing measures. As I said in my opening speech, since March last year, the Government have provided businesses and their employees with a comprehensive package of support targeted at saving jobs and livelihoods, including the furlough and job retention schemes and billions of pounds in loans, rates relief, tax deferrals and grants.

Let me attempt to address some of the issues raised in the debate. The noble Lord, Lord Sikka, made a number of important points and asked in particular what the Government are doing to make long-term plans when these temporary measures end. I can assure him that we continue to keep these matters under review, and will of course always keep in mind all the various provisions in what we think is our world-class insolvency regime, to ensure that it remains fit for purpose.

My noble friend Lord Bourne asked about the different timescales for all these measures. He makes a good point. Following the expiry of the wrongful trading measure at the end of September last year, the country entered a new phase of national restrictions, necessitating the urgent reintroduction of the wrongful trading temporary measures in the Corporate Insolvency and Governance Act, which of course could not be made retrospective, whereas this measure was already in force and was not due to expire until 31 December 2020.

My noble friend also asked how temporary these measures are and whether there was any impact assessment. We of course keep under consideration the ongoing impact of Covid-19 in the context of the new period of national lockdown, the ongoing effect of social distancing and the potential impact that these measures will have when we determine what measures should be extended and the period of that extension. Because of the temporary nature of the measures, as I am sure my noble friend will understand, a full impact assessment has not been carried out and, indeed, is not required by the better regulation framework. However, the Government have considered, and will continue to assess and monitor, the possible and likely impacts of the measures, their scope and their potential risks.

The noble Baroness, Lady Jones, and a number of other noble Lords, raised the issue of HMRC’s preferential status and the impact on HMRC. That of course does not concern these particular regulations. We work closely with the regulators, the courts and the insolvency profession to ensure that they will be able to scale up and cope with the expected increase in insolvencies. The noble Baroness did not let us down and managed to include references to climate change and environmental factors. As I am sure she will understand, they are not connected with these measures, but I acknowledge her long-term point, which I think is right, about the need for environmental sustainability in businesses. I refer her to the recent announcement by the Chancellor that the UK will implement the requirements of the task force on climate-related financial disclosures, which will require companies to make disclosures of their climate impacts, so there will be an ability to compare across companies and shareholders will be able to take this into account when making investment decisions. The UK is one of the world’s leading regimes in making companies go over to these measures. The noble Baroness will also be awaiting with interest the further measures that will address some of these factors, which will be forthcoming in the review of the audit procedures.

My noble friend Lady McIntosh, the noble Lord, Lord Razzall, and the noble Baroness, Lady Ritchie, asked what plans are being made for the end of these measures. As I said, businesses have already received billions in loans, tax relief, rate relief and grants to support them, and of course we always keep all these measures under consideration. The Government recognise the cliff-edge scenario, which would involve the cumulation of unpaid debts becoming due when restrictions and government fiscal support expire, and I can tell noble Lords that work is ongoing to develop measures to address what we are aware is a potential issue.

My noble friend Lord Bourne also asked about an impact assessment. As I said, we are not required to carry out an impact assessment under the better regulation framework, but of course we take careful note of the issues and what effect they are having.

The noble Baroness, Lady Ritchie, asked why the measures were not made for longer. The temporary measures under the original legislation can be extended only for six months at a time. Of course we realise that they are a serious curtailment, as a number of noble Lords pointed out, of the rights of creditors, so we keep them under constant review to ensure that we get the balance right and that they are not kept in place for longer than is absolutely necessary. When the measures expire, the insolvency regime will return to its normal working practices, including the right of creditors to act to wind up companies that have not paid their debts.

The noble Lord, Lord Razzall, also raised the issue of the impact assessment and asked how many liquidations have been postponed under these regulations and their predecessors since the summer. I do not have those figures for him, but if there is any further information that I can provide him with, of course I will do so in writing.

Finally, the noble Lord, Lord Stevenson, asked how it would be possible for a petitioner to satisfy a court on, as he put it, the negative that the debt was not due to coronavirus tests. That is a good point, but ultimately it is for the courts to consider how to apply that test and whether the failure to pay is not related to Covid-19 in individual cases. The test of whether Covid-19 has caused a company’s difficulties is intended to present a high bar, as I think the noble Lord recognised, temporarily to enforce the forbearance of creditors that the Government have called for.

Extending this measure now to 31 March will provide the necessary certainty that companies are looking for, to provide them with relief in the short term. However, the Government recognise the difficulties faced by many small businesses and sole traders and have introduced a range of support measures, including local restrictions support grants, bounce-back loans, deferred VAT and PAYE payments and, of course, the newly announced job support measure that is due to commence in May.

In conclusion, these regulations will provide much-needed continued support for businesses, allowing them to concentrate their best efforts on continuing to trade and build on the foundations for economic recovery in the UK. Careful consideration has been given to the extension of these temporary measures. As I said, we will continue to monitor this situation closely before making any decisions about further extensions and, of course, at the time we will consult fully with businesses and their representatives. With that, I commend these regulations to the Committee.

Motion agreed.