Corporate Insolvency and Governance Act 2020 moratorium and restrictions on ipso facto clauses—financial services exemptions map
Corporate Insolvency and Governance Act 2020 moratorium and restrictions on ipso facto clauses—financial services exemptions map

The following Banking & Finance practice note provides comprehensive and up to date legal information covering:

  • Corporate Insolvency and Governance Act 2020 moratorium and restrictions on ipso facto clauses—financial services exemptions map
  • Moratorium
  • Restriction on ipso facto clauses
  • Table A: companies ineligible for moratorium—financial services
  • Table B:contracts involving financial services which do not benefit from a payment holiday during moratorium
  • Table C: contracts excluded from suspension of ipso facto (termination) clauses

This Practice Note provides a map of the financial services exemptions from the provisions for moratorium and restrictions on ipso facto clauses which were inserted by the Corporate Insolvency and Governance Act 2020 (CIGA 2020) into the Insolvency Act 1986 (IA 1986).

For general information on CIGA 2020 and links to further materials, see News Analysis: Corporate Insolvency and Governance Act 2020.

Moratorium

CIGA 2020 inserts a new Part A1 into 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.

The company needs to meet the following criteria:

  1. it is, or is likely to become, unable to pay its debts, and

  2. it is likely that the moratorium would result in the rescue of the company

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