Firms have been protected from creditor “action” during the Covid-19 pandemic, but these rules will start to disappear from 1 October, following the lifting of restrictions around the UK in the past few months.

Although the government is promising some new measures to “help smaller companies get back on their feet to give them more time to trade their way back to financial health before creditors can take action to wind them up”.

These new measures are being particularly aimed at retail businesses as well as the hospitality and leisure sectors.

This includes raising the current debt threshold for winding up petitions to £10,000 to “protect businesses from creditors insisting on repayment of relatively small debts”.

While creditors will also have to give firms 21 days to come up with a payment proposal before any winding up action can be taken. These new measures will stay in place until 31 March 2022.

Business minister Lord Callanan said: “The time is right to lift the insolvency restrictions that were needed during the pandemic.

“At the same time, we know many smaller businesses are rebuilding their balance sheets and reserves, and some will need more time to get back on their feet. These new measures protections will help them to do that.

“Businesses should pay contractual rents where they are able to do so. However, the existing restrictions will remain on commercial landlords from presenting winding up petitions against limited companies to repay commercial rent arrears built up during the pandemic.”

These new temporary insolvency rules will apply across the UK.