The Compendium

• No Administrative Receiver may be appointed.
• Other types of Receiver also cannot be appointed under the separate provision in para 43(2) of Schedule B1 of the Insolvency Act 1986, which restricts the taking of steps to enforce security over the company’s property.
• No step to enforce a security over the company’s property can be taken.
• No repossession of goods under a Hire Purchase agreement can take place.
This includes an agreement for Retention of Title (RoT), as well as a chattel leasing agreement.

[See ‘Administrator’, ‘Insolvency Act’, ‘Interim Moratorium’, ‘Chargeholder’, ‘Administrative Receiver’, ‘Retention of Title’ and ‘RoT’.]

Moratorium (CIGA 2020)

The Corporate Insolvency and Governance Act 2020 (CIGA) added a moratorium process, to be used by directors of companies who believe that a struggling company can be rescued, if given the opportunity to do so.

The CIGA 2020 moratorium process grants companies breathing space to enhance their chances of survival. There can be an initial 20 business day moratorium (during which no action can be taken against the company by existing creditors). This initial 20 days can be extended by a further 20 days (longer if the creditors agree). A ’Monitor’ will be appointed; this is an Insolvency Practitioner who oversees the process and must bring the moratorium to an end by filing a notice at court if she thinks that:

• The CIGA moratorium is no longer likely to result in the rescue of the company as a going concern;
• The objective of rescue has been achieved;
• She is unable to carry out their functions as the directors have not provided them with the relevant information;
• The company is unable to pay moratorium debts which have fallen due or pre-moratorium debts for which the company does not have a payment holiday.

However, responsibility for the day-to-day running of the company remains with the directors (a ‘debtor-in-possession’ procedure).