01344 776 225 info@pkb.co.uk

The outbreak of Coronavirus and the three-month lockdown that followed has been tough on UK businesses.

Not being able to operate to full capacity or even at all has taken a huge financial toll and many are now struggling to stay afloat. Please be assured that if you’re in this position, you’re not alone and there is plenty of help available.

As well as taking advantage of the many government support schemes which have been introduced as a result of COVID-19, you can apply for a moratorium.

 

What is a moratorium?

A moratorium gives struggling businesses formal breathing space in which to explore rescue and restructuring options, free from creditor action.

Except in certain circumstances, no insolvency proceedings can be instigated against a company during the moratorium period. It also prevents legal action being taken against a company without permission from the court – with the exception of employment tribunal proceedings, or proceedings between an employer and a worker, which do not require permission of the court to commence or continue.

Directors remain in control of the company and will still need to meet their filing obligations with Companies House. Late filing penalties will still be applied if accounts are filed late.

 

How to apply for a moratorium

The director(s) must file for or apply to court for a moratorium. This will give your company 20 business days to consider rescue options.

The moratorium will be managed by a monitor, who is a licensed insolvency practitioner.

 

Can a moratorium be extended?

Your moratorium can be extended for a further 20 business days without creditor consent, or for a longer period with creditor consent. You can do this by filing relevant statements with the court. It can also be extended further on application to the court.

Any extension must be made before the current expiry of the moratorium.

 

What to send to Companies House

To make sure your company’s record is accurate and up to date, any notices must be delivered to Companies House as quickly as possible.

The monitor must deliver notice of the commencement of a moratorium to Companies House.

They also need to receive a notice if:

  • The moratorium is extended.
  • The moratorium is terminated early.
  • The monitor is replaced, or an additional monitor is appointed.
  • The court makes an order giving permission for the disposal of property.

The moratorium will expire at the end of the initial 20 business day period or any extended period.

The monitor is not required to deliver a notice stating that the moratorium has ended if it has expired by time.

The monitor must deliver a notice if it has ended for another reason, such as:

  • It has been terminated early by the monitor.
  • The company has entered an insolvency procedure.

 

Who can apply for a moratorium?

A moratorium can be applied for by companies and LLPs registered in England and Wales, Scotland and Northern Ireland. Please head to the gov.uk website for further information.

If your business is struggling, please don’t hesitate to get in touch with PKB and we’ll be able to advise you about the different options available to you.

To read news and blogs from Rebecca Austin, click here >>

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