An Assessment of the UK Restructuring Moratorium

Many jurisdictions have recently introduced reforms to their debt restructuring regimes in order to ensure that financially distressed but viable companies have effective tools to facilitate their rescue. The COVID-19 pandemic has intensified the need for such tools. The inclusion of a statutory stay is a consistent feature in these reforms. This article examines the introduction of a restructuring moratorium in the UK as part of its recent debt restructuring reforms, introduced by the Corporate Insolvency and Governance Act 2020. Moratoria can be potentially very valuable in promoting the rescue of a company or business, but a balance is required between the benefits to the company and the creditors as a whole on the one hand and the rights of the individual creditors on the other. The success of the UK’s restructuring moratorium in achieving a successful balance is assessed. Ultimately it is argued that the necessary balance does not seem to have been achieved and that the constraints and limitations placed on the moratorium, for creditor protection and other reasons, limit the potential value of this mechanism to a significant extent. Many companies will therefore have to continue to look elsewhere for protection from creditors seeking to disrupt their restructurings.