At a Glance: Summary of UK temporary insolvency and enforcement restrictions as a result of COVID-19 – with expiry dates


Many permanent and temporary changes to insolvency laws have been made during the COVID-19 pandemic to help companies (and individuals) in financial distress. In particular the introduction of three key permanent measures: a new 20 business day moratorium (that can be extended) which will give companies a "payment holiday", impose restrictions on what the company and its directors may do, and limit what enforcement actions creditors may take during this time along the lines of the existing administration moratorium; a new restructuring plan that will bind both secured and unsecured creditors, and introduce a cross-class "cram-down" mechanism; and suppliers of a company in an insolvency procedure or under the protection of the company moratorium will not be able to rely on contractual terms to stop supply, terminate or vary contract terms/increase prices unless the supplier can prove (to the court) that it will suffer financial hardship if it does not take these steps.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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