Legislation
Have your say: proposed moratorium route for companies in trouble
27/08/2010 09:48
The Insolvency Service has asked businesses seeking to collect debts to comment on new proposals to give companies in trouble protection from creditors in some circumstances, so they have more time to restructure or negotiate a compromise with those creditors.
The proposals – set out in a government consultation – will allow companies to apply to court for a moratorium stopping creditors from collecting their money where the company is seeking an agreed compromise, or a statutory compromise, such as a Company Voluntary Arrangement or Scheme of Arrangement. A company could only apply if, among other criteria, its core business was viable and it was not already failing or insolvent.
Creditors could be represented at the court hearing to sanction the moratorium, while an authorised insolvency practitioner would be involved throughout to protect their interests. The moratorium would initially last for three months, but this could be extended if negotiations, or the statutory compromise, were taking longer.
The directors would continue to manage the company but there would be additional duties and penalties to ensure their good behaviour.
Businesses have until 18 October 2010 to respond the consultation.
Operative date
- 18 October
More information
- Download the consultation from the Insolvency Service website (PDF)