Key elements of a standstill agreement

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

  • Key elements of a standstill agreement
  • Parties
  • Purpose of a standstill
  • Practicalities
  • Duration and extension
  • Commencement date
  • Key terms
  • Termination of standstills
  • Disadvantages of standstills

Key elements of a standstill agreement

When restructuring is considered rather than formal insolvency proceedings (see Practice Note: Benefits of informal restructuring over formal proceedings) the company may want to ensure that relevant creditors quickly enter a standstill agreement to gain some breathing space to consider a restructuring plan.

A standstill agreement is an agreement between the company and its creditors restraining creditor enforcement action (see Precedent: Standstill agreement).


The debtor company will be a party, together with operating subsidiaries holding valuable assets or at risk of formal proceedings or breaching their financial covenants, as well as usually the ultimate parent company. Other parties will be creditors and other stakeholders who are essential to the success of the company eg key customers, suppliers (if the company is a critical client, useful concessions may be obtained) and the pensions trustee/regulator (if there is a large pensions deficit). Who has a seat at the negotiating table (and who should be party to the standstill) depends on where value is expected to break (see Practice Note: Where the value breaks and negotiating strength). Companies with complex layers of debt have various creditor classes with conflicting motives. Understanding their positions is key. For example, original lenders of record acquiring the debt at par may have a history of supporting the company, whereas secondary debt traders acquiring debt at less than par

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