A review of the insolvency framework: a new moratorium to help business rescue

Abstract

With a view to making Britain the best place in the world to start and grow a business, on 25 May 2016 the Government launched “A Review of the Corporate Insolvency Framework: A consultation on options for reform” (the “Consultation”). Motivated by a manifesto pledge to put the UK in the top five of the World Bank’s Doing Business ratings, the Consultation puts forward four key proposals to encourage rescues of viable businesses: the introduction of a pre-insolvency restructuring moratorium; the protection of essential supplier contracts during restructuring; the ability to bind and cram-down secured creditors in a restructuring; and exploring options for rescue financing. This article will consider the central plank to the reforms, the introduction of a new restructuring moratorium. Experienced readers will remember similar proposals being made in 2010 (“Proposals for a Restructuring Moratorium” (the “2010 Proposals”)), with questions remaining whether the issues arising then have been addressed.