Moratorium Schedule 3
Paragraphs 1-8 make various amendments to Part 1 of the Insolvency Act 1986 (company voluntary arrangements) to ensure that directors of a company that is subject to a moratorium may propose a voluntary arrangement for the company. They also remove references to Schedule A1, which is repealed by this Schedule. Paragraph 4 provides protection for creditors of unpaid moratorium debts (and certain unpaid pre-moratorium debts for which the company did not have a payment holiday during the moratorium – defined in new section 174A as ‘priority pre-moratorium debt’)) in a subsequent company voluntary arrangement. Where the nominee’s report that leads to approval of a company voluntary arrangement is made during or within 12 weeks of the end of the moratorium, such creditors must be paid in full unless they agree otherwise.
	Paragraphs 9, 13 and 14 ensure that unpaid moratorium debts (and certain unpaid pre-moratorium debts for which the company did not have a payment holiday during the moratorium – defined in new section 174A(3) as ‘priority pre-moratorium debt’), as well as any fees and expenses of the official receiver, rank above all other claims and expenses, other than those of fixed charge creditors (to the extent such creditors can be paid out of the assets charged) where proceedings for winding up are begun during or within 12 weeks of the end of a moratorium. This is partly achieved by the insertion of new section 174A into the Insolvency Act 1986. These debts are also given protection from being compromised in a company voluntary arrangement, scheme of arrangement or restructuring plan proposed by the company within the same period (see paragraph 131 of these Notes in relation to a company voluntary arrangement and paragraph 193 of these Notes in relation to a scheme of arrangement and a restructuring plan).
	Included in the list of priority pre-moratorium debts (which attract super priority in the 12-week post moratorium period) are pre-moratorium debts that arise under a contract or instrument involving financial services and which fell due before or during the moratorium. This gives legal certainty to financial services market participants thereby supporting UK financial stability and gives financial services lenders the incentive to continue lending to companies entering a moratorium. However, taken with the exclusion granted to these creditors from the provisions at sections 14 and 15 of the Corporate Insolvency and Governance Act 2020 (see new section 233B and new Schedule 4ZZA to the Insolvency Act 1986 and paragraph (233 to 237 of these Notes), entry to a moratorium could trigger an early termination or acceleration clause of a financial services contract with the effect of accelerating the payment of debt. . In such circumstances, it would not be appropriate for the accelerated debt to gain super priority over the expenses and over the other unsecured creditors in the event that the company entered administration or liquidation within 12 weeks of a moratorium (or to gain additional protection in a company voluntary arrangement, scheme of arrangement or restructuring plan). New section 174A(3)(c)(iii) makes clear that ‘relevant accelerated debt’ will not receive super priority. ‘Relevant accelerated debt’ is any pre-moratorium debt under a contract or other instrument involving financial services that fell due in the period from the day of the monitor’s statement made under section A6(1)(e) to the end of the moratorium, by reason of the operation of, or the exercise of rights under, an acceleration or early termination clause. This also applies to "on-demand" facilities - such as overdrafts - and prevents such accelerated debt from receiving super priority status.
	New section 174A(6), (7) and (8) create a regulation-making power to amend the definitions of ‘moratorium debt‘ and ‘priority pre-moratorium debt’ in section 174A using an affirmative resolution procedure. This power allows government to amend what does and does not receive super priority (and protection from compromise), should market practice indicate that tightening of the provisions is necessary. The terms ‘moratorium debt’ and ‘priority pre-moratorium debt’, as defined in section 174A, are also used in the provisions relating to super priority in a subsequent administration and protection from compromise in a subsequent company voluntary arrangement, scheme of arrangement or restructuring plan. This has the effect that any changes made to these definitions in section 174A will also affect the operation of those other provisions.
	Paragraphs 10, 11 and 15 remove references to the old Schedule A1 moratorium in a CVA procedure as that has been removed from the Act.
	Paragraph 12 ensures that section 127 of the Insolvency Act 1986 (avoidance of property dispositions etc.) has no effect in relation to a company where the winding-up order is based on a petition presented before the moratorium begins, unless the petition was presented under section 367 of the Financial Services and Markets Act 2000.
	Paragraph 16 amends section 246ZD to include the ability of an administrator or liquidator to challenge the remuneration charged by a monitor in relation to a moratorium as a right of action that may be assigned.
	Paragraphs 17 and 18 amend sections 246A and 246B to add the monitor and the moratorium to the list of office-holders and proceedings which can allow for remote attendance at meetings and the use of a website as a means of delivering or sending a notice.
	Paragraph 19 amends section 247 to include a moratorium under Part A1 within the meaning of insolvency.
	Paragraph 20 amends section 387 to remove references to the old Schedule A1 from the "relevant date" in relation to preferential debts.
	Paragraph 21 amends section 388 so that acting as a monitor is included within the meaning of "acting as an insolvency practitioner".
	Paragraphs 22, 23 and 27 amend sections 411 (company insolvency rules), 414 (fees order) and 431 (summary proceedings) to include the new moratorium procedure.
	Paragraph 24 inserts new section 415B which will allow the Secretary of State to amend the monetary limits in relation to the moratorium.
	Paragraph 25 removes existing section 417A (which relates to the old Schedule A1) from the Act.
	Paragraphs 26 and 28 make amendments for the inclusion of the relevant criminal offences related to the moratorium scheme, and update section 430 Insolvency Act 1986 in light of the Criminal Justice Act 2003.
	Paragraph 29 amends section 434 to ensure that the provisions in Part A1 also bind the Crown.
	Paragraph 30 omits Schedule A1 from the Insolvency Act 1986.
	Paragraphs 31 amends Schedule B1 (Administration) to remove references to the old Schedule A1 and ensure that unpaid moratorium debts (and certain unpaid pre-moratorium debts for which the company did not have a payment holiday during the moratorium – defined in new section 174A as "priority pre-moratorium debt") rank above all other claims and expenses, other than those of fixed charge creditors (to the extent such creditors can be paid out of the assets charged) where a company enters administration upon or within 12 weeks of the end of a moratorium. This is partly achieved by the insertion of new paragraph 64A into Schedule B1 of the Insolvency Act 1986.
	Paragraph 32 amends Schedule 8 (Provision capable of inclusion in company insolvency rules) so that rules in respect of the matters listed in Schedule 8 can also be made for the moratorium under Part A1.
	Paragraph 33 amends Schedule 10 (Punishment of Offences) to remove the entries that relate to offences under the old Schedule A1 and add the maximum sentences for the new offences introduced in Part A1.
	Paragraph 34 amends the Building Societies Act 1986 to omit reference to section 1A of the Insolvency Act 1986, which has been omitted by paragraph 2 of this Schedule.
	Paragraph 35 amends the Financial Markets and Insolvency (Settlement Finality) Regulations 1999 to remove references that relate to Schedule A1.
	Paragraphs 36-38 amend the legislation for limited liability partnerships so that the moratorium provisions also apply to them.
	Paragraph 39 amends the Financial Services and Markets Act 2000 (Disclosure of Confidential Information) Regulations 2001 by adding reference to the monitor and their functions to Schedule 2 of those regulations.
	Paragraph 40 amends the Financial Collateral Arrangements (No.2) Regulations 2003 by omitting paragraph (5) because it disapplied certain paragraphs of Schedule A1 to the Insolvency Act 1986, which is being repealed by this Act.
	Paragraph 41 amends the Insolvency Practitioners Regulations 2005 to ensure that an insolvency practitioner acting as a monitor is covered by these regulations.
	Paragraph 42 amends section 154 of the Banking Act 2009 to remove references that relate to Schedule A1.
	Paragraphs 43-45 amend the Charities Act 2011 to provide (in relation to section 245 of that Act) that regulations under (1)(b) of that Act may not apply Part A1 of the Insolvency Act 1986 in relation to a CIO that is a social landlord registered under Part 1 of the Housing Act 1996; but new section 247A is inserted to allow Welsh Ministers to provide by regulations that Part A1 of the Insolvency Act 1986 may apply (with or without modifications as set out in the regulations) to a CIO that is a registered social landlord under the Housing Act 1996. In addition, the power in section 347 of the Charities Act 2011 Act may be used to disapply or modify specified provisions of the Housing and Regeneration Act 2008 and the Housing and Planning Act 2016 in relation to registered social landlords that are CIOs.
	Paragraphs 46-48 amend the Investment Bank Special Administration Regulations 2011 to remove references that relate to Schedule A1.
	Paragraph 49 amends the Charitable Incorporated Organisations (Insolvency and Dissolution) Regulations 2012 to apply new Part A1 of the Insolvency Act to CIOs; except where the CIO is a registered provider of social housing or is registered as a social landlord under Part 1 of the Housing Act 1996.
	Paragraphs 50-53 amend the Co-operative and Community Benefit Societies Act 2014 to remove references that relate to Schedule A1 and to ensure that secondary legislation can be made, by the Treasury with the concurrence of the Secretary of State, to apply the moratorium provisions to co-operative and community benefit societies, while not allowing it to apply in relation to a society that is registered as a social landlord under the Housing Act 1996 or Housing (Scotland) Act 2010. Welsh and Scottish Minsters, respectively, may, by regulations, provide for the moratorium provisions to apply to social landlords registered under these Acts.
	Paragraph 54 amends the Co-operative and Community Benefit Societies and Credit Unions (Arrangements, Reconstructions and Administration) Order 2014 to alter the definition of the Insolvency Act 1986 so as to save the Schedule A1 moratorium provisions until the new Part A1 provisions are modified and applied by regulations.
	Paragraph 55 amends the International Interests in Aircraft Equipment (Cape Town Convention) Regulations 2015 to ensure that the moratorium provisions do not override anything contained in these regulations in respect of an aircraft object in respect of which an international interest has been registered.