Claims against insolvent companies and individuals

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When a company or an individual enters into a formal insolvency or enforcement process, restrictions may be imposed on the ability of creditors or prospective creditors to continue or bring claims against that insolvent company or individual. This is distinct from the commercial considerations of whether it is worthwhile (economically or otherwise) bringing, or continuing with, a claim against an insolvent opponent.

Corporate insolvency processes

Restrictions on bringing, or continuing with, claims against a company which is in a formal insolvency process apply in liquidations, administrations and, to some extent, company voluntary arrangements (CVAs).

There is no formal moratorium during either a restructuring plan under Part 26A of the Companies Act 2006 (CA 2006) or a scheme of arrangement under CA 2006, Pt 26, although parties may agree their own arrangements. Once approved, both restructuring plans and schemes of arrangement bind those affected classes of creditors and/or members.

Other than commercial considerations, no restrictions apply in respect of a company in receivership (including administrative receivership).

Administration

There are two types of moratorium in an administration, the moratorium and the interim moratorium,

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Latest Restructuring & Insolvency News

Restructuring & Insolvency weekly highlights—12 June 2025

This week's edition of Restructuring & Insolvency weekly highlights includes: the Court of Appeal’s judgment on treatment of secured debt under the Debt Respite Scheme (Breathing Space Moratorium and Mental Health Moratorium) (England and Wales) Regulations 2020 (Forbes v Interbay Funding Ltd; Forbes and Seculink Ltd), the Insolvency Service’s 2024 practitioner regulation review, plus a round-up of other news and cases for restructuring and insolvency.

Council endorses Directive to harmonise EU insolvency laws and enhance cross-border investment

The Council of the EU has announced its endorsement of the EU Directive aimed at harmonising key aspects of insolvency law across member states. This initiative is designed to align national insolvency regimes, thereby reducing legal divergences that currently deter foreign and cross-border investment. Notably, the Directive introduces a pre-pack mechanism accessible in all member states, enabling the pre-negotiation and swift execution of business sales during insolvency, along with provisions for the automatic transfer of essential executory contracts under controlled safeguards. In addition, the directive mandates the establishment of creditors’ committees in certain cases to enhance creditor participation, with harmonised rules regarding their composition, rights, duties, and liability—with the option for member states to confine this requirement to large enterprises. Further measures agreed in December 2024 include protections for the insolvency estate, clarified directors' duties regarding insolvency proceedings, and strengthened transparency obligations. The Council now intends to negotiate with the European Parliament to finalise these provisions into law.

Insolvency Service publishes May 2025 enforcement outcomes management information

The Insolvency Service has updated its enforcement outcomes management information for May 2025. The data shows that there were 89 director disqualifications and 8 bankruptcy and debt relief restrictions.

Insolvency Service announces 11-year ban for director over BBL fraud

The Insolvency Service has announced the disqualification of Romain McLean, director of RMC Associates Limited, from being a company director for 11 years following an investigation into bounce back loan (BBL) fraud. McLean secured £80,000 through two separate loans after overstating his company's turnover by more than £100,000 in the first application and making false declarations in the second. The disqualification began on 30 May 2025 and will run until 2036. McLean has offered a £60,000 settlement payment.

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