Moratorium

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The Corporate Insolvency and Governance Act 2020 (CIGA 2020) inserted a new Part A1 into the Insolvency Act 1986 (IA 1986) which provides for a new insolvency process whereby directors of a company can obtain a free-standing moratorium for the company. This lasts for an initial period of 20 business days, which can be extended.

It is designed to allow viable businesses time to restructure or seek new investment free from creditor action. 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 moratorium is free-standing—it is not a gateway to or tied to a particular insolvency or restructuring process.

For an overarching guide to the moratorium, see Practice Note: Moratorium—an introductory guide.

Who is eligible to apply?

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 as a going concern

In

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