Corporate Insolvency and Governance Act 2020—moratorium extension and termination

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

  • Corporate Insolvency and Governance Act 2020—moratorium extension and termination
  • Extending the moratorium
  • Exiting the moratorium—the monitor
  • Exiting the moratorium—the company
  • Routes to challenge

Corporate Insolvency and Governance Act 2020—moratorium extension and termination

The Corporate Insolvency and Governance Act (CIGA 2020) inserts a new Part A1 into the Insolvency Act 1986 (IA 1986) which provides for a new 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.

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

CIGA 2020, Sch 4 contains temporary rules for the purpose of the moratorium to ensure the process could be used immediately after enactment. From 1 October 2021, The Insolvency (England and wales) (No.2) (Amendment) Rules

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