A non-court-based alternative to Bankruptcy and an Individual Voluntary Arrangement for insolvent individuals that owe less than a prescribed amount of debt and have less than a prescribed value of assets.

What is a DRO? DROs are 'a new and simplified way of wiping the slate clean for debtors who are too poor to go bankrupt'. A DRO is made in respect of qualifying debts. A qualifying debt means a debt which is: • for a liquidated sum payable either immediately or at some future time • not secured • not an excluded debt Under Insolvency (England and Wales) Rules 2016 (IR 2016), SI 2016/1024, r 9.2, an excluded debt means: • any fine for an offence or obligation arising under an order made in family proceedings or a maintenance assessment or maintenance calculation made under the Child Support Act 1991 • any obligation arising under a criminal confiscation order • student loans • damages in respect of the death of or personal injury to any person • a crisis loan or budgeting loan made under the Social Security Contributions and Benefits Act 1992 Who may apply? An applicant for a DRO must: • be unable to pay their debts • be domiciled

Debt relief orders Debt relief orders (DROs) are an alternative to bankruptcy and are dealt with in sections 251A–251X and Schedule 4ZA to the Insolvency Act 1986 (IA 1986), and supplemented by the Insolvency (England and Wales) Rules 2016 (IR 2016), SI 2016/1024, Pt 9. They provide protection from debts by prohibiting further legal process against the debtor without the court's permission and, after a year, discharges the debtor from those debts. The big difference between a DRO and bankruptcy is that DROs are available only to debtors with no substantial assets and no income over and above what is necessary for the debtor's 'reasonable needs', and there are no provisions for the collection, realisation and distribution of the debtor's estate on the basis there will be nothing to distribute. As set out in R (on the application of Payne) v Secretary of State for Work and Pensions, DROs are a 'a new and simplified way of wiping the slate clean for debtors who are too poor to go bankrupt.' For further reading on DROs,

An order that imposes restrictions upon the debtor beyond the moratorium period.

An order which imposes restrictions upon a debtor beyond the moratorium period under his debt relief order.

A court order extending the restrictions imposed on an individual subject to a DRO for between two and fifteen years notwithstanding the debtor’s discharge from all the qualifying debts.

An undertaking offered by a debtor who is, or has been, subject to a debt relief order to the Secretary of State which imposes restrictions upon him beyond the moratorium period under such order.

Same as a DRRO, save that instead of a court order it comes into effect by way of an undertaking given by the Bankrupt and accepted by the Secretary of State.

The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020, SI 2020/1311 (the Regulations) came into force on 4 May 2021. The Regulations allow an individual who meets the relevant eligibility criteria to apply, via a debt advice provider, for either a breathing space moratorium or, where the individual is receiving mental health crisis treatment, a mental health crisis moratorium. In either case, the effect of a moratorium is to restrict enforcement action by creditors, and to freeze interest, fees and charges on debts caught by a moratorium, in respect of any qualifying debt. A moratorium is not in itself a means to an end—instead it affords an individual with problem debt an opportunity to seek professional debt advice and formulate a long-term solution to their financial difficulties. The process for obtaining either a breathing space moratorium or a mental health crisis moratorium is largely the same. This Practice Note focuses on breathing space moratoriums. Eligibility criteria for a breathing space moratorium An individual with

Restructuring & Insolvency analysis: In the first appellate decision at High Court level on the surprisingly far-reaching Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 (the Debt Respite Regulations), the High Court allowed the creditor’s appeal in a decision which is decidedly creditor-friendly. Sir Anthony Mann held that—(1) the courts retain the jurisdiction at all times to determine whether in point of law a particular debt is a ‘moratorium debt’, regardless of whether a creditor has exercised the review machinery under the Debt Respite Regulations; and (2) where proceedings are live when a moratorium is entered into, a creditor does not need the court’s permission to proceed up to entry of judgment. Written by Tom Morris, barrister at Landmark Chambers.

The debt sale and purchase market is an important way for lenders and debt sellers to reduce balance sheet liability. It is often used as a way to obtain value for under-performing accounts, but sales take place in relation to all types of debt: regulated mortgages, loan and card agreements regulated by the Consumer Credit Act 1974 (CCA 1974), specialist debt such as store card debt, and distressed and insolvent debt. The type of debt will impact the detail of the sale documentation, but the mechanics and risk of the sale are largely similar. This Practice Note covers the basic structure of a commercial debt sale arrangement for consumer credit in the UK, the roles of the parties and the key issues within the sale documentation, including how both parties protect themselves from the relevant risks. The process of debt sale and purchase Many debt sales will begin as an auction process. A seller will often 'package-up' a tranche of debt to be sold and put it out to tender. Multiple bidders may then place bids

What are legal opinions? In debt capital markets transactions, legal opinions are formalised letters of legal advice which have two main functions: • to provide a checklist of the legal matters which are fundamental to the legality of the offering and distribution of the securities and the enforceability of the transaction documents and the securities, and • to confirm that the law firm giving the opinion has taken responsibility for the legal matters stated in it Legal opinions in debt capital markets transactions are highly standardised and there are well established market conventions covering the following: • When are legal opinions given? • Who provides legal opinions? • What issues do legal opinions address? • Who can rely on a legal opinion? • The assumptions and qualifications that may be included in legal opinions. For more information on legal opinions generally, see Practice Note: Legal opinions—uses, scope and structure. When are legal opinions given? Legal opinions are included in the conditions precedent documents to be delivered at closing for: • standalone issues • initial issues under programmes, and