Moratorium
There is currently no free-standing moratorium available for UK companies. The policy is to introduce such a moratorium allowing a company in financial distress a breathing space in which to explore its rescue and restructuring options free from creditor action. The moratorium will be overseen by an insolvency practitioner (IP) acting as a monitor although the directors will remain in charge of running the business on a day-to-day basis (known as a ‘debtor-in-possession' process with the company being the ‘debtor’).
	The aim of the moratorium is to facilitate a rescue of the company, which could be via a company voluntary arrangement (CVA) (a procedure under Part 1 of the Insolvency Act 1986 or in Northern Ireland, Part 2 of the Insolvency (Northern Ireland) Order 1989, that enables a company that is in financial difficulty, but not necessarily insolvent, to make a binding compromise and arrangement with its creditors), a restructuring plan (as also introduced by this Act – see paragraphs 9-16) or simply an injection of new funds. The intention is that the moratorium will result in better, more efficient rescue plans that benefit all of a company’s stakeholders. There will no requirement to have a particular outcome in mind at the time of entry into a moratorium.
	The objective is to provide a streamlined moratorium procedure that keeps administrative burdens to a minimum, makes the process as quick as possible and does not add disproportionate costs onto struggling businesses.
	The moratorium will be free-standing. It will not be a gateway to a particular insolvency procedure (or any process at all, if the company can be rescued during the moratorium without needing entry into an insolvency procedure). Possible rescue outcomes include:
	recovery of the company without further action/process;
	sale and/or refinancing outside insolvency;
	CVA under Part 1 of the Insolvency Act 1986 (Part 2 of the Insolvency (Northern Ireland) Order 1989);
	scheme of arrangement under Part 26 of the Companies Act 2006;
	implementing a restructuring plan under the new Part 26A of the Companies Act 2006.
	To ensure the moratorium is only used appropriately, there will be a number of exclusions that mean that a company is not eligible. For example, it cannot have been in a moratorium in the previous 12 months unless the court has ordered otherwise. The company and its proposed monitor must also make a number of statements, regarding the company’s financial state and prospects for rescue, before it can enter a moratorium. The moratorium must be brought to an end if it becomes apparent to the monitor that the company is unlikely to be rescued. The requirements on prospect for rescue, bringing the moratorium to an end, and certain of the exclusions for entry will be temporarily amended to account for the COVID-19 pandemic.