What Is a Company Moratorium and Can It Stop Creditor Action?

A company moratorium can provide a struggling UK business with temporary protection from certain creditor actions while directors explore rescue or restructuring options. The initial moratorium normally lasts for 20 business days, during which directors usually remain in control while a licensed insolvency practitioner acts as monitor. The protection can restrict actions such as winding-up proceedings, enforcement of certain security and some legal claims. However, it does not freeze every debt or remove the company’s obligations. Ongoing liabilities may still need to be paid. A moratorium is most useful where the underlying business remains viable and the breathing space could lead to refinancing, a CVA, restructuring or another realistic rescue solution.

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