The Company will benefit in a number of ways. The Company will receive a payment holiday from certain pre-moratorium debts which are usually in the main amounts owing to suppliers. However, the following will still have to be paid during the Moratorium period:
- The Monitor’s remuneration and expenses;
- Goods or services supplied during the moratorium;
- Rent (for the moratorium period only);
- Wages, salary and redundancy payments (not limited to those falling due during the moratorium); and
- Debts or other liabilities arising under a contract or other instrument involving financial services. The usual capital repayments and interest due to lenders will still likely be payable unless agreed with the lender.
During the Moratorium period various actions of creditors will be prevented:
- Floating charge holders cannot crystallise their charge or appoint an Administrator;
- Creditors and shareholders of the Company cannot commence insolvency proceedings;
- No steps can be taken to enforce security without consent of the Monitor or Court.
- Finance Companies are not able to repossess hire-purchase goods without Court consent;
- No proceedings or other legal processes, except certain employment claims, can be commenced or continued during the moratorium without Court consent;
- Landlords cannot forfeit leases without Court consent;
- No security can be taken over the Company’s property without the Monitor’s consent; and
- Pre-moratorium creditors cannot apply to Court to enforce their debt.
There are also restrictions and obligations of the Company and its directors, including a £500 restriction on credit, the inability to enter into certain types of contract and a threshold on payment of pre-moratorium debt without the Monitor’s consent.