Q&As

Would a director's unsecured liability under a personal guarantee be caught by the breathing space in the new Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020, SI 2020/1311?

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Published on LexisPSL on 26/01/2021

The following Restructuring & Insolvency Q&A provides comprehensive and up to date legal information covering:

  • Would a director's unsecured liability under a personal guarantee be caught by the breathing space in the new Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020, SI 2020/1311?

Would a director's unsecured liability under a personal guarantee be caught by the breathing space in the new Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020, SI 2020/1311?

The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 (the Regulations), SI 2020/1311 were made on 19 November 2020 and come into force on 4 May 2021 (subject to some exceptions).

The Regulations introduce two new moratoria available to individuals in England and Wales with problem debt—the breathing space moratorium and the mental health crisis moratorium. The moratoria restrict enforcement action by creditors and freeze interest, fees and charges on moratoria debts.

The Regulations, SI 2020/1311, reg 6 defines a moratorium debt as any ‘qualifying debt’ owed by the debtor at the point at which the application for the moratorium was made. ‘Qualifying debt’ is defined in the Regulations, SI 2020/1311, reg 5 as being any debt or liability other than ‘non-eligible debt’ (our emphasis). Accordingly, unless a personal guarantee given by a director in respect of a loan to a company falls within the ambit of non-eligible debt, it is difficult to see how it would not be

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