On March 28, 2020[1], the UK Government announced that it will introduce new legislation extending the UK’s existing restructuring and insolvency laws to include:
- a new company moratorium to give companies a breathing space from creditors while they seek to rescue or restructure;
- protection of supplies to enable companies to trade during the moratorium; and
- a new restructuring plan, binding on creditors.
The Government previously consulted on these changes in 2018 (the Consultation) but did not introduce them[2]. (In the Consultation it was proposed that: the moratorium would be standalone procedure, preventing the enforcement of security, legal proceedings and creditor action; supplies would be protected by prohibiting reliance on contractual termination clauses based solely on insolvency events; and the new restructuring plan would be based upon the existing scheme of arrangement but with cross-class cram-down available as a means of binding dissenting creditors.)
