On Thursday 25 June 2020 the Corporate Insolvency and Governance Act (the Act) received Royal Assent. The Act makes both temporary and permanent changes to the UK insolvency laws.
As part of these measures, a ‘new debtor-in-possession moratorium’ has been introduced to existing legislation that enables companies to have a minimum 20 business days breathing space without threat of creditor action.
Under the moratorium, the day-to-day running of the business remains in the directors’ control, under the supervision of a licensed insolvency practitioner (the monitor) and subject to certain restrictions.
This note addresses the following issues:
- (Lack of) Control Over the Process
- Enforcement Restrictions
- Other Security Risks
- What Options are Open to Lenders?
- How will Lenders’ Debts be Ranked in a Subsequent Insolvency?
- Other Changes to UK Insolvency Laws