Company Moratorium

Company Moratorium: Formal Breathing Space for a Viable Business Under Pressure

When a business is fundamentally viable but creditor pressure has made it impossible to focus on recovery, what it needs most is time. Not weeks of negotiation — statutory, legally enforceable time.

A Company Moratorium provides exactly that. Introduced under the Corporate Insolvency and Governance Act 2020, it is a formal procedure that gives eligible businesses a protected period in which creditors cannot take legal action, winding-up petitions cannot be presented, and the directors remain in control of day-to-day operations.

It is one of the least-used tools in business rescue — and one of the most underestimated. For the right business in the right situation, a moratorium can be the difference between a controlled recovery and a rushed administration.

Get In Touch

Trusted. Regulated. Experienced.

1. Regulated by the ICAEW 2. 30+ years of insolvency practice 3. Award-winning Firm

A Less Invasive Alternative to Administration

Directors facing urgent creditor pressure often assume that administration is their only option for immediate legal protection. It is not.

A Company Moratorium provides a statutory shield against creditor action — comparable in its immediate effect to the administration moratorium — without placing the company into an insolvency procedure or transferring control away from the directors. You continue to run the business day-to-day throughout. The monitor — a licensed insolvency practitioner — oversees the process and provides the statutory oversight creditors require, but operational control remains with the management team.

For businesses that are struggling but viable, and where the primary need is time rather than a more intensive restructuring intervention, a moratorium is often a faster, less costly, and less disruptive route than administration.

A Less Invasive Alternative to Administration

How a Moratorium Protects Your Business

From the moment the moratorium begins, a legal shield is placed around the company. The protections are immediate and statutory — they do not require creditor consent to take effect.

During the moratorium period, creditors cannot start or continue legal proceedings against the company without court permission. Winding-up petitions cannot be presented. Landlords cannot forfeit leases or repossess property. Lenders cannot enforce security over company assets.

This protected period is designed to create the conditions in which a meaningful rescue can be planned and implemented — whether that is a Company Voluntary Arrangement, a refinancing, new investment, or a solvent sale of the business.

The initial moratorium period is 20 business days. It can be extended for a further 20 business days by the directors without creditor consent, and extended further still — up to a year or more — with creditor approval or a court order, depending on the complexity of the rescue plan.

Is Your Company Eligible?

The moratorium is specifically designed for businesses that are struggling but viable. Three conditions must be met.

First, the company must be, or be likely to become, unable to pay its debts. The moratorium is a rescue tool for genuinely distressed companies — it is not available to solvent businesses.

Second, the monitor must be able to certify that a rescue of the company as a going concern is likely. This is a meaningful threshold. The monitor cannot simply certify viability as a formality — they must have an honest basis for believing recovery is achievable. This is one of the reasons a realistic assessment at the outset matters so much.

Third, the company must be able to pay its ongoing obligations incurred during the moratorium itself — new supplies, wages, and rent for the moratorium period. Pre-existing debts are paused, but new liabilities must continue to be met. A business that cannot cover its ongoing costs is unlikely to be eligible.

Certain categories of company are excluded entirely — including financial institutions, insurers, and companies already in a formal insolvency procedure. We will confirm your eligibility quickly in our first conversation.

Wondering whether a moratorium or administration is the right route? Our first conversation will give you a clear, honest answer based on your specific position.

 

Get In Touch
Is Your Company Eligible?

Expert Advice, Delivered Personally

The Insolvency Practitioners is an independent national firm led by Michael Chamberlain – one of the UK’s most experienced insolvency professionals. With over 30 years of practice and Big 4 pedigree, Mike has acted as monitor and administrator across some of the most complex rescue situations in the UK.

Every director who contacts us speaks to Mike directly – not a junior, not a call handler. That is not something every firm can say.

“A moratorium is about preservation. It’s for the business that has a future but is currently being suffocated by its past. Our role as monitor is to provide the credibility and oversight needed to demonstrate to creditors that a rescue is not just possible — but likely.”

How the Moratorium Process Works

  1. Assessment. We review the business to confirm eligibility and establish whether a moratorium provides the right level of protection for the situation.
  2. Monitor appointment. A licensed insolvency practitioner is appointed as monitor. The monitor files the required notices with Companies House and the court, triggering the statutory protections immediately.
  3. Protected period. The 20-business-day moratorium begins. The directors continue to manage operations; the monitor oversees compliance and confirms on an ongoing basis that rescue remains likely.
  4. Rescue planning. During the protected period, we work alongside the directors to implement the restructuring plan — whether that is a CVA proposal, a refinancing, or an alternative route.
  5. Exit or extension. At the end of the initial period, the moratorium either concludes having achieved its purpose, is extended where further time is needed, or — if rescue is no longer viable — ends and the appropriate next step is discussed.

Ready to Find Out If a Moratorium Is Right for You?

If your business has a genuine future but needs time to find it, our first conversation will establish quickly whether a moratorium is available to you — and whether it is the right tool.

Not sure whether a moratorium, a CVA, or administration is the right route? Our Rescue My Company page explains all three options and helps you identify which fits your situation.

Start the Conversation

If you need immediate breathing space to protect your business, let’s talk. Request a confidential callback from Michael or a senior member of the team.

Your enquiry is strictly confidential. We provide practical expert advice without the hard sell.

What happens next? Michael or a member of the team will call you to discuss your eligibility for a moratorium and help you understand whether it is the right next step for your business.

Get In Touch

FAQ's

How long does a Company Moratorium last?

The initial period is 20 business days. This can be extended for a further 20 business days by the directors without creditor consent. Beyond that, further extensions of up to a year or more are possible with creditor approval or a court order, depending on the complexity and progress of the rescue plan.

Do I lose control of my company during a moratorium?

No. Unlike administration, the directors remain fully in control of day-to-day management throughout the moratorium. The monitor's role is oversight — confirming that the conditions for the moratorium continue to be met — not operational control. This is one of the key advantages of a moratorium over administration for businesses that do not need hands-on external management.

Which debts are paused during the moratorium?

Pre-moratorium debts — those that existed before the moratorium began — are stayed, meaning they cannot be enforced during the protected period. However, the company must continue to meet obligations incurred during the moratorium itself: new supplier invoices, wages, rent for the moratorium period, and other ongoing costs. This is one of the eligibility conditions and is assessed at the outset.

How much does a Company Moratorium cost?

Monitor fees vary depending on the complexity of the case and the length of the moratorium. Because the moratorium is a less intensive process than administration, costs are typically lower. We provide a clear, upfront indication of costs before any work begins.

Is a moratorium better than administration?

It depends on the situation. A moratorium is less invasive, less costly, and leaves the directors in control — making it well-suited for businesses that need time to implement a CVA or complete a refinancing. If the business needs more intensive hands-on management, an immediate going-concern sale, or a pre-pack, administration is likely the more appropriate tool. We will give you an honest assessment of which fits your circumstances.

Can any company use a moratorium?

Most UK limited companies can, but there are exceptions. Financial institutions, insurance companies, and companies already in a formal insolvency process are ineligible. We confirm eligibility as part of our initial assessment.

What happens if rescue is no longer likely?

The monitor has a statutory duty to end the moratorium if they conclude that rescue of the company as a going concern is no longer likely. If that point is reached, we will discuss the most appropriate next step — which may be a CVA if restructuring remains viable, or a CVL if closure is the responsible outcome.

Get in touch

Contact our team today for assistance with selling your business, let us help you sell your business.