Company Moratorium Services
This new exciting rescue tool came into being on 25 June 2020 under new government legislation. It is designed to give directors and their struggling companies protection from their creditors whilst they sort out a rescue plan.
We can assist you with putting this moratorium in place. It needs formal oversight by a ‘monitor’ who needs to be an Insolvency Practitioner, which is a service that we provide. We are able to move quickly and cost effectively as soon as instructed.
What is a company moratorium?
A company moratorium prevents any legal action being taken against the company without court permission. Where before a moratorium could only be implemented under an insolvency procedure, whereas this new measure provides stand alone legal protection which does not automatically conclude in a formal insolvency process.
The moratorium is designed to give the company an opportunity to solve their financial problems, away from legal pressure. It is not a long-term solution but rather a short and temporary period of relief.
The moratorium will apply several protections over the company. These include:
- Landlords not being able to implement any Commercial Rent Arrears Recovery (“CRAR”),
- No petitions of a winding up order can be made,
- No petition for administration can be proposed and no administrative receiver can be presented or appointed,
- There can be no action to secure or repossess Hire-Purchase goods in the company’s procession, including those with a retention of title agreement,
- No other legal action can be taken against the company
The moratorium can be extended via several routes: by directors without creditor consent, beyond 40 days with creditor consent, by court on application of directors, while proposal for CVA pending, by court in course of other proceedings.
The Company Moratorium Process
Eligibility
Monitoring
Conclusion
The Advantages and Disadvantages of Company Moratoriums
Advantages of Company Moratoriums
- Provides a director led breathing space.
- A process which is instigated and controlled by the director(s).
- It is a stand alone procedure that has no association with a formal insolvency process.
- It can be put in place quickly.
- It provides reassurance to creditors as it is monitored by a licensed Insolvency Practitioner.
Disadvantages of Company Moratoriums
- Short term solution.
- The company must give notice that it is operating under a moratorium to the registrar of companies, all creditors, employees and customers.
- The moratorium can only continue it is in the opinion of the monitor that the company can be saved.
- No property can be sold without the permission of the monitor.
- Key liabilities must continued to be covered.
Contact Us
We are happy to offer you an initial free Company moratorium consultation that can be done remotely on a video or telephone call. We will also discuss the options such as annulment, validation orders, administration, creditors voluntary liquidation (cvl) or company voluntary arrangement (cva).
Give us a call on 0113 242 0808 or e-mail advice@chamberlain-co.co.uk.
Company moratoriums FAQ's
Can the company continue to take credit?
Credit can only be taken up to certain limits before the company needs to inform suppliers that a moratorium is in place.
Do post moratorium debts have any priority?
If the company proceeds into a formal insolvency procedure within 12 weeks of the moratorium ending, various rules will dictate how these are paid.
Can the directors sell assets to generate cash?
Yes, with the approval of the monitor if they are uncharged assets.
Can the company give security during the moratorium?
Only if the monitor consents.
