COMPANIES could face winding-up petitions over debts of just £750 after temporary legislation to help struggling firms expired.

Directors are being urged to seek early advice if their business is distress after the temporary winding-up petition threshold was dropped from £10,000 as of April 1.

Garry Lee, regional chair of the insolvency industry body R3 in the south, said:  “Now, more than ever, it’s critical company directors seek advice if they’re worried about their businesses or concerned about their ability to pay staff, landlords or suppliers.

“If they don’t, they could face the financial, operational and emotional effects and costs of contesting winding-up petitions in court over a debt of £750 or more.”

Mr Lee, an associate director at accountancy firm Smith & Williamson’s Southampton office, added: “Over the last two years we have seen a number of instances where creditors have recognised that engagement leads to better outcomes than enforcement.

“Many creditors appreciate the climate that businesses are operating in, and are willing to have a conversation about how and when they can be paid, but that needs to take place sooner rather than later.

“Company directors need to have the conversation about the financial situation they’re in, what they owe and who they owe it to with a qualified and regulated expert so they can develop a plan for settling their debts, before creditors resort to legal action to recoup what they are owed.”

Restrictions preventing commercial landlords from issuing winding-up petitions against limited companies for unpaid rent during the pandemic also expired on March 26.

Mr Lee is urging businesses who are concerned about this to seek advice about their problems.

“Rent is typically one of a business’ largest expenses – especially in the retail and service sectors, and many directors may have found the amount they owe has increased if the pandemic has affected their ability to trade,” he said.

“It will be a while before the business environment returns to pre-pandemic levels, and companies in will already have to face the prospect of increased fuel and energy costs affecting their bottom line and their cashflow, which will make balancing the books a lot harder without any kind of specialist help.

“If you’re worried about your business’ financial position, or you’re having problems paying suppliers, taxes or staff – which is a clear sign your business is financially distressed – seek advice from a qualified source, someone who can outline the potential options open to you for resolving the situation your business is in.”