Moratorium in relation to a Limited Liability Partnership
Moratorium in relation to a Limited Liability Partnership

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

  • Moratorium in relation to a Limited Liability Partnership
  • The moratorium under IA 1986, Part A1
  • Eligibility
  • How to apply
  • During the moratorium
  • The monitor
  • Moratorium followed by administration/winding-up/voluntary arrangement
  • Extending and terminating the moratorium

Moratorium in relation to a Limited Liability Partnership

The moratorium under IA 1986, Part A1

The Corporate Insolvency and Governance Act 2020 (CIGA 2020) received Royal Assent on 25 June 2020. It made a number of significant changes to insolvency law as it relates to limited liability partnerships (LLPs), including introducing two new procedures: the moratorium and the restructuring plan. For further details on CIGA 2020, see: Corporate Insolvency and Governance Act 2020—overview. For further information on the restructuring plan, see Practice Note: The restructuring plan in respect of a Limited Liability Partnership.

CIGA 2020 inserted a new Part A1 to the Insolvency Act 1986 which creates a new insolvency process whereby directors of insolvent companies and members of insolvent LLPs, as well as those 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 members will remain in charge of running the business on a day-to-day basis (known as a ‘debtor-in-possession’ process with the LLP 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

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