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ARTICLE · 29 NOVEMBER 2012

Lifting The Moratorium In Administration

MacRoberts
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When a company goes into administration, it benefits from a "moratorium" that prevents creditors taking legal and other proceedings against the company or its assets.

United KingdomInsolvency/Bankruptcy/Re-Structuring
Alan Meek
Alan Meek
John Reid
John Reid
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Lazari GP Ltd v Jervis

When a company goes into administration, it benefits from a "moratorium" that prevents creditors taking legal and other proceedings against the company or its assets.   The main purpose of the moratorium is to free an administrator's rescue attempts from the distractions of legal action from creditors. 

However, where a creditor can demonstrate that its legal rights can be exercised without adversely affecting the purposes of the administration, the moratorium may be lifted, by the administrator or the Court, to allow the creditor to take such legal action.

In the English case of Lazari GP Ltd v Jervis [2012] EWHC 1466 (Ch), a landlord of a tenant in administration was given permission to forfeit a lease notwithstanding the moratorium in administration.

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