Moratorium

A moratorium is a legally imposed period during which creditors are prevented from taking enforcement action against the debtor. In insolvency, moratoriums arise in administration (under Schedule B1 of the Insolvency Act 1986), during Company Moratoriums (Part A1, introduced by the Corporate Insolvency and Governance Act 2020), and in Breathing Space for individuals.

In practice

The administration moratorium prevents any steps to enforce security, repossess goods under hire-purchase, or commence or continue legal proceedings against the company without the administrator's consent or the court's permission. The standalone Company Moratorium under Part A1 lasts for an initial 20 business days (extendable) and is monitored by a licensed insolvency practitioner. Breach of a moratorium by a creditor may be treated as contempt of court.