Insolvency framework measures: moratorium, termination clauses, arrangements and reconstructions for companies in financial difficulty (restructuring plan)
The current legislation relating to corporate insolvency is set out in the First Group of Parts of the Insolvency Act 1986, in particular –
	Company voluntary arrangements (Part 1)
	Administration (Part 2)
	Winding up of registered companies (Part 4)
	A company in financial difficulties can agree a voluntary arrangement with its creditors if the requisite proportion of creditors (75% calculated by value of debts) approve its proposals. The arrangement cannot affect the rights of a secured creditor or the rights of a preferential creditor to be paid in priority to other debts, in either case without their express consent.
	In addition, Part 26 of the Companies Act 2006, which provides for schemes of arrangement, can be used to effect a company rescue. The new Part 26A restructuring plan regime has been largely modelled on Part 26 schemes. As the Companies Act 2006 provisions implicitly bind the Crown, any arrangement or reconstruction agreed and implemented under new Part 26A will also necessarily be binding on the Crown.
	Section 233 Insolvency Act 1986 assists the insolvency office-holder in maintaining "essential" supplies– utilities, communications and IT supplies, by preventing the supplier of them demanding payment of outstanding charges as a condition of supply. The supplier may seek a personal guarantee from the office-holder.
	Section 233A of the Insolvency Act 1986 prohibits termination of a contract by utility, communications and IT suppliers on the basis of an insolvency related term in their contract. The main objective is to help companies continue to trade through an insolvency process that aids the rescue of companies – company voluntary arrangements and administrations. Safeguards are provided in that suppliers can terminate the contract on certain conditions: where the office-holder consents, where the court grants permission on the grounds of hardship, where the office-holder has failed to provide a personal guarantee within 14 days of a request by the supplier or if post procedure supplies are not paid for within 28 days.
	The existing restrictions on termination of contracts for essential supplies will be retained. The new section 233B of the Insolvency Act 1986 applies to contracts for the supply of all other types of goods and services (unless exempted).
	The current company law and insolvency law frameworks offer a number of options for achieving a rescue of a financially distressed company as a going concern or the sale of the company’s business. While administration, found in Part II of the Insolvency Act 1986, can be used to effect a restructuring (where the affairs of the company are taken over by an administrator), debtor-in-possession models (where the directors remain in control of the company) such as the company voluntary arrangement under Part I of the Insolvency Act 1986 and the scheme of arrangement under Part 26 of the Companies Act 2006, are more likely to be used to effect a company rescue.
	The current legislation relating to corporate insolvency in Northern Ireland is to be found in the Insolvency (Northern Ireland) Order 1989, which makes equivalent provision to the Insolvency Act 1986 (except for section 233A, which is discussed below).