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A moratorium procedure as introduced by the Corporate Insolvency and Governance Bill 2020

Vince Green, Partner, Recovery Solutions 
Forest road sunbeams

The Corporate Insolvency and Governance Bill (CIGA), aims to give struggling businesses a formal breathing space to pursue a rescue plan, creating a moratorium during which no legal action can be taken against a company without leave of the court.

CIGA came into force on 26 June 2020 after being fast-tracked through Parliament due to the current economic crisis caused by the COVID-19 pandemic.

The key measures of the Bill are summarised below and can be followed in our moratorium process flowchart.


  • No application can be made if the company has entered into a moratorium in the previous 12 months without an order of the court.
  • Some companies are not eligible for the procedure such as insurance companies, banks, or companies which are party to a capital markets arrangement in an amount of over £10 million.

Effect of moratorium

  • Creditors cannot petition for the winding up of the company.
  • No resolution for the winding up of the company may be passed by the shareholders other than if recommended by the Directors.
  • No application for administration may be made other than by the Directors.
  • No notice of intention to appoint an administrator by the holder of a qualifying floating charge can be lodged at court.
  • No administrative receiver may be appointed.

These restrictions do not apply to Directors.


Cashflow forecasts must be produced which suggest that the company will be able to meet ongoing trading liabilities as and when they fall due (as well as the liabilities where a payment holiday does not apply), and that the company is likely to be rescued as a going concern.

Payment Holiday

The debts of the company at the date of the moratorium are pre-moratorium debts with a payment holiday. The moratorium imposes a stay on any pre-moratorium debts.

There is no payment holiday for amounts falling due in the period of the moratorium in respect of the following categories:

  • the monitor’s remuneration or expenses
  • the goods or services supplied during the moratorium
  • rent in respect of a period during the moratorium
  • wages or salary arising under a contract of employment
  • redundancy payments
  • debts or other liabilities arising under a contact or other instrument involving financial services such as lending and financial leasing.


If a company is eligible, a moratorium may usually be initiated by completing and filing relevant documents with the court. In some cases, an application to court will need to be made by a solicitor to obtain an order for a moratorium. The moratorium will not start until the documents have been filed at court or the court order has been obtained.

The Monitor

The role of Monitor may only be undertaken by a licenced Insolvency Practitioner who acts as an officer of the court.

The principal duty of the Monitor is to monitor the Company’s continued adherence to the requirements of the moratorium by regularly reviewing cashflows and management accounts, and the progress made on exiting the moratorium as a going concern.

The proposed Monitor must confirm their view that it is likely that a moratorium would result in 'the rescue of the company as a going concern'. Prior to 30 September 2020 temporary relaxations and this confirmation can be qualified by using the following wording: or would do so if it were not for any worsening of the financial position of the company for reasons relating to coronavirus.

Following appointment, the Monitor is required to issue a number of notices for the attention of the Registrar of Companies, the creditors, the Pension Protection Fund and the Pensions Regulator.

A moratorium lasts 20 business days only if an extension is sought, this is for an additional 20 business days. An extension is achieved by the Directors filing the relevant documents with the court. If a moratorium is sought beyond 40 business days, the creditors will need to give their consent and a decision procedure will need to be convened to obtain creditor approval. If Directors wish to extend the moratorium for longer than 12 months, an application to court will need to be made and solicitors instructed.

Once the Company is able to be rescued as a going concern, the moratorium will no longer be required. If at any time the Directors determine the Company is no longer able to be rescued as a going concern, they must advise the Monitor who will bring the moratorium to an end. If the Monitor has not been provided with the information they require to meet their duties as Monitor, they may file the relevant documents to bring the moratorium to an end. If agreement has been obtained for a Company Voluntary Arrangement or an Arrangement or Reconstruction under the Companies Act 2006, this will bring the moratorium to an end.

Directors’ Responsibilities

  • The Directors remain in control of the Company and will continue to trade the Company while a strategy for the rescue of the Company as a going concern is being actively pursued by the Directors.
  • It is the Directors’ responsibility to provide information to the Joint Monitors during the moratorium and to advise the Joint Monitors of any change in circumstances which would impact the moratorium.
  • The Directors will be expected to keep the Monitor advised of the progress being made in respect of:
  • refinancing
  • obtaining a cash injection
  • seeking approval for a Company Voluntary Arrangement
  • applying to court to start the process for approving an Arrangement or Reconstruction under the Companies Act 2006.

For information on how we can help support your business please contact Vince Green or your usual Crowe contact.

Contact us

Vince Green
Vince Green
Head of Recovery Solutions