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ARTICLE · 05 APRIL 2022

High Court Rules On First Contested UK Standalone Moratorium Process

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The first case to consider the requirement of a monitor to terminate a moratorium if they think a company is unable to pay certain debts was heard by the High Court on 4 February 2021.

United KingdomInsolvency/Bankruptcy/Re-Structuring
Devi Shah
Devi Shah
Amy Rothbarth
Amy Rothbarth
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The first case to consider the requirement of a monitor to terminate a moratorium if they think a company is unable to pay certain debts was heard by the High Court on 4 February 2021. The case provides further clarity on the UK standalone moratorium process and is an example of a moratorium being used in order to restrain secured creditor action.

What is the moratorium process?

The standalone moratorium process was introduced pursuant to the Corporate Insolvency and Governance Act 2020 which added a new Part A1 to the Insolvency Act 1986. The moratorium process aims to afford breathing space to a company in financial distress in order that it can assess potential rescue and restructuring options without the threat of creditor action. The moratorium is therefore focused upon the rescue of the company as a going concern rather than on the realisation of assets.

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