Company moratorium services

The moratorium is a temporary legal protection that prevents most creditor enforcement action while a company explores viable rescue or restructuring options. During this period:

• Creditors cannot initiate most legal actions (including winding‑up petitions)
• The company continues to trade under the directors’ control
• A licensed insolvency practitioner (the “monitor”) oversees compliance and viability

The main benefits of a moratorium are that it provides immediate protection, gives time to develop solutions and allows directors to remain in control, subject to oversight.

However, it is important to understand that loan interest and other contractual charges may continue to accrue during the moratorium. Likewise, certain debts, such as rent, employee wages, the monitor’s fees and some financial debts, must still be paid on time.

While it is a useful restructuring tool, there are scenarios in which a moratorium is not appropriate, for instance:

• When the business is not viable
• When a rescue is not realistically achievable
• When the company cannot meet certain required debts (those arising during the moratorium and those classified as priority pre‑moratorium debts) as they fall due

In these situations, it is worth exploring other restructuring or insolvency processes.

Before the moratorium commences, there is normally a period of preparation that can take a few days or up to a week.

During this time, the directors and the proposed monitor will assess the business’s viability, confirm that the company can meet the required debts, and prepare the necessary filings. 

The moratorium will come into effect when filed at court, providing immediate protection from creditor enforcement actions for an initial period of 20 business days.

During the moratorium, the company continues to trade, the monitor reviews the company’s financial position and cashflow forecasts, and the directors begin to develop or refine the restructuring or rescue plan, in conjunction with guidance and scrutiny from the monitor. 

If necessary, directors can request an extension of the moratorium to 40 business days, without requiring creditor consent.

If the moratorium needs to be extended beyond 40 business days, then creditor consent is required. Any extension is also contingent on a statement from the monitor supporting the request.

A moratorium expires at the end of its permitted period, unless extended, and usually results in one of the following:

• A return to normal trading
• Implementation of a CVA or restructuring plan
• Agreement of new financing, entry into administration or liquidation if rescue is not viable after all

It is important to note that no two cases are the same, which is why we encourage early engagement with an experienced restructuring professional to explore and openly debate which of the range of business rescue options is best. While there are processes to follow, careful planning and discussion with professional advisors takes time. A moratorium is not an instant remedy and is usually implemented in conjunction with a proposed CVA or restructuring plan. 

Our team used a moratorium to pause landlord and local authority bailiff enforcement actions and restructure lease obligations while securing new funding via a CVA for BE Offices. It comprised about 20 separate but interrelated companies, and required at least one moratorium for each.

The result of the processes implemented was to stabilise cash flow, protect the continued business operations at all sites and deliver a controlled pathway to long‑term recovery through a CVA with secured lender support.

Our team used a moratorium before the administration of this live events and ticketing platform. The specialist nature of this business meant that any trading during administration would not have been possible.

In this case, the moratorium enabled continued trading and urgent negotiations with a prospective buyer of the business, while holding at bay creditors who were threatening to serve a winding-up petition.

The result was a successful sale of the business and assets out of administration, which meant continuity of the platform and customer service, as well as saving jobs.