Corporate Insolvency and Governance Act 2020—moratorium
Corporate Insolvency and Governance Act 2020—moratorium

The following Restructuring & Insolvency practice note provides comprehensive and up to date legal information covering:

  • Corporate Insolvency and Governance Act 2020—moratorium
  • Who is eligible to apply?
  • How to apply
  • Relevant documents
  • During the moratorium
  • The monitor
  • Areas of concern

The Corporate Insolvency and Governance Act (CIGA 2020) inserted Part A1 into the Insolvency Act 1986 (IA 1986) which provides for a insolvency process whereby directors of insolvent companies, or companies that are likely to become insolvent, can obtain a 20 business day moratorium period. This is designed to allow viable businesses time to restructure or seek new investment free from creditor action. The moratorium is overseen by an insolvency practitioner acting as a ‘monitor’, although the directors will remain in charge of running the business on a day-to-day basis (known as a ‘debtor-in-possession’ process with the company being the ‘debtor’) subject to certain constraints. The intention is to provide a streamlined procedure that keeps administrative burdens to a minimum, makes the process as quick as possible and does not add disproportionate costs on to struggling businesses.

The moratorium will be free-standing—it is not be a gateway to a particular insolvency (or any process at all, if the company can be rescued during the moratorium without needing entry into an insolvency procedure).

This Practice Note considers how the moratorium may be commenced, what action may be taken during the moratorium and potential areas of difficulties. For information on how to extend, terminate and challenge the moratorium, see Practice Note: Corporate Insolvency and Governance Bill 2020—moratorium extension and termination.

For copies of forms to be used in connection

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