Research and analysis

Corporate Insolvency and Governance Act 2020 - Interim report March 2022

Published 19 December 2022

Applies to England, Scotland and Wales

Professor Peter Walton and Dr Lézelle Jacobs, University of Wolverhampton

Executive summary

The Corporate Insolvency and Governance Act 2020 (CIGA) came into force on 26 June 2020. The Government committed to a review of the operation of CIGA’s three permanent measures within three years of the CIGA commencement. As part of that review, in September 2021, the University of Wolverhampton was commissioned to conduct independent research. The research is being carried out using a mixed methods approach in two stages. This Interim Report considers the results of “Stage One” which considered the data arising from a series of semi-structured interviews of various stakeholders. Stage Two will continue with some further interviews but also involve an online survey of the insolvency practitioner profession.

The CIGA was introduced during the 2020 “lockdown” as a result of the Covid 19 pandemic and contained a range of temporary measures to support companies affected by trading restrictions linked to the pandemic response, as well as three permanent measures to help companies recover as the economy emerged, and for the longer term.

The evaluation is limited to considering the three permanent CIGA measures: restructuring plans (RPs) under Part 26A of the Companies Act 2006; the standalone Moratorium under Part A1 of the Insolvency Act 1986 (the Act); and the restriction on contractual termination (ipso facto) clauses under s 233B of the Act.

The permanent CIGA measures have been broadly welcomed by stakeholders and are seen as satisfying their policy objectives.

The RP is seen as a success building as it does upon existing case law governing Schemes of Arrangements (Schemes). The RP’s cross-class cram down power has been used successfully in cases where previously a Scheme on its own would not have been effective. Furthermore, the high quality of UK judges adjudicating on RPs is seen as a real strength. However, RPs are seen as too costly and time-consuming for use in the SME market. In simpler cases, the courts and stakeholders could be more pragmatic about the required documentation and might be dealt with in a single hearing by an Insolvency and Companies Court (ICC) judge. The costs of challenging a RP are seen as excessive which hinders the policy objective of protecting dissenting creditors. Finally, the primary legislation governing RPs might be made more attractive when compared to overseas jurisdictions.

The Moratorium has been used successfully and has satisfied its policy objectives. Nevertheless, there are significant concerns that it alters pre-existing priorities in any subsequent insolvency. The alteration of creditor priorities may have unintended consequences and there is uncertainty about how this alteration of priorities operates in relation to a number of specific types of creditor.

The restrictions on ipso facto clauses are seen as a positive addition to the powers available to insolvency practitioners and companies who have entered a formal insolvency procedure. The ipso facto measure is seen to satisfy its policy objectives but it remains too early to assess fully how the measure will operate.

Each of the CIGA measures is seen to be assisting the rescue of companies as going concerns. This in turn is seen as contributing to job retention in those companies.

Glossary

CIGA

Corporate Insolvency and Governance Act 2020

Company moratorium

the process found in Part A1 of the Insolvency Act 1986 which allows a company’s directors to file documents at court which creates an initial 20 business day stay on creditor actions against the company.

Company Voluntary Arrangement (CVA)

the CVA is one of the statutory procedures available to a company in financial difficulties (under Part 1 of the Insolvency Act 1986). A CVA takes the form of a composition of debts or a scheme of arrangement agreed between a company and its creditors out-of-court by the unsecured creditors voting in favour by a majority of at least 75% in value. Secured creditors cannot be bound unless they agree, however, the unsecured creditors are bound by the arrangement.

Relevant comparator/alternative test

under this test the court must be satisfied that, if sanctioned, none of the dissenting creditors in a RP are any worse off than they would be in the event of the ‘relevant alternative’ (usually administration or liquidation).

Convening hearing

a RP or Scheme under the Companies Act 2006 commences with an application to court requesting the court orders the convening of meetings of different classes of creditors (and/or members).

Cram down

the court may sanction or approve a RP even where one or more classes of creditor or member have not approved the RP. In such circumstances, as long as at least one class of creditor or member has approved the RP, the court may impose the RP on the dissenting class(es). This cross-class cram down will only be sanctioned by the court if none of the members of the dissenting class is no worse off than it would be in the event of the ‘relevant alternative’ which will usually be an administration or liquidation.

Executory contracts

a contract under which unperformed obligations remain on both sides, or where both parties have continuing obligations to perform.

Insolvency practitioner (IP)

IPs are licensed by recognised professional bodies. Only licensed IPs can take certain appointments such as liquidator, administrator, CVA supervisor or Moratorium Monitor.

Ipso facto clauses

these are usually contractual provisions which allow one party to terminate a contract if the other contracting party enters a formal insolvency (or other events listed in the contract occur). Such clauses may be used to encourage ‘ransom payments’ from insolvent companies to pay debts owing prior to the formal insolvency as a condition of further supplies.

Mid-market company

this phrase is usually used to describe the segment of the market comprising companies which fall in between what are defined as small and medium entities (see SME description below) and large entities.

Monitor

an IP who acts in relation to a Company Moratorium and monitors the company’s ability to continue to pay its debts falling due during the Moratorium period.

Pre-pack pool

the Pre-Pack Pool is an independent body of experienced business people set up in response to a series of recommendations contained in the Teresa Graham report on pre-packaged administrations from 2014. A Pool member provides an opinion on the purchase of a business and/or its assets by connected parties to a company where a pre-packaged sale is to be proposed by an administrator. Until 2021, persons connected to a company, such as directors, who intended to purchase the business of their company through an administration, could voluntarily ask the Pre-Pack Pool to opine on the terms of the proposed purchase. The opinion was seen as providing confidence that the sale was appropriate in the circumstances. Since the Administration (Restrictions on Disposal etc to Connected Persons) Regulations 2021 it is now generally a legal requirement to obtain the opinion of an evaluator (the Pre-Pack Pool being one of several such evaluators) prior to a connected party pre-pack sale going through within 8 weeks of the commencement of the administration.

R3

the Association of Business Recovery Professionals

Restructuring plan (RP)

the RP (under part 26A of the Companies Act 2006) is one of the statutory procedures available to a company that has encountered or is likely to encounter financial difficulties. A RP requires two court hearings: 1) to convene meetings of creditors (and members) and 2) a sanction hearing to approve the decisions of the class meetings. Classes of creditors vote by a 75% majority in value in each class to approve the RP. At the sanction hearing the court may still approve the RP even if one or more class has voted against the RP by exercising its power to cram down the dissenting class(es).

Sanction hearing

a RP or a Scheme first requires a convening hearing where the court orders class meetings to take place. Once those meetings have voted the court is asked to sanction or approve the decisions made.

Scheme of arrangement (scheme)

the Scheme (under part 26 of the Companies Act 2006) is one of the statutory procedures available to a company. It is not dependent upon the company being in financial difficulty but will frequently be used in that context. A Scheme requires two court hearings: 1) to convene meetings of creditors (and members) and 2) a sanction hearing to approve the decisions of the class meetings. Classes of creditors vote by a 75% majority in value and a majority in number to approve the Scheme. The court has no power to cram down a class who has not voted in favour of the Scheme.

SME

small and medium-sized enterprises. A company is defined as small under the Companies Act 2006 if it satisfies two or more of the following requirements: it has a turnover of not more than £10.2m; it has a balance sheet total of not more than £5.1m; and it has no more than 50 employees. A company is defined as medium-sized under the Companies Act 2006 if it satisfies two or more of the following requirements: it has a turnover of not more than £36m; it has a balance sheet total of not more than £18m; and it has no more than 250 employees.

1. Introduction

The Corporate Insolvency and Governance Act 2020 (CIGA) introduced three permanent measures aimed to relieve the burden on businesses both during and after the Covid-19 pandemic:

• Restructuring Plan under Part 26A of the Companies Act 2006

• Company Moratorium under Part A1 of the Insolvency Act 1986

• Restriction on Ipso Facto (Termination) clauses under s 233B of the Insolvency Act 1986.

The Government made a commitment to review the three permanent measures no later than three years after they came into force (on 26 June 2020). A further commitment was made during the passage of the bill to conduct a review on the impact of the measures on employees.

As part of this Post-Implementation Review (PIR), the Government commissioned the University of Wolverhampton in September 2021 (following fair and open competition), to provide an evidence base by way of a process evaluation of how the permanent measures have been used and received by various stakeholders. This process evaluation has referred to guidance outlined in the government guide to evaluation – the Magenta Book. [Process evaluations tend to examine activities involved in an intervention’s implementation and the pathways by which the policy was delivered. HM Treasury. (2020) The Magenta Book: Central Government guidance on evaluation. London. Crown Copyright. Available at: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/879438/HMT_Magenta_Book.pdf.]

The process evaluation is limited in scope to the three permanent provisions (the CIGA measures) and does not therefore consider the various temporary measures introduced to assist businesses to survive the Covid-19 pandemic.

The aim of the process evaluation is to address the research questions in order to inform the PIR in line with the Better Regulation principles. [The Better Regulation principles are provided by the Better Regulation Unit, the team in each department responsible for promoting the principles of good regulation and advising departmental policy makers. The Better Regulation Framework (publishing.service.gov.uk).] The PIR provides the Insolvency Service with an opportunity to gather primary research on how the measures are working and to establish whether any refinements or changes to the policy need to be made. The process evaluation seeks to track the progress in the delivery of the measures. This is done by using a mixed methods approach.

This is an Interim Report based upon the first of two stages of the process evaluation. Stage One involved qualitative research via in-depth interviews with Insolvency Practitioners (IPs), legal professionals and trade associations.

This Interim Report begins with a short explanation of the Background to the CIGA measures. It then explains the Methodology adopted for the evaluation. The Findings are then considered in the following order: General Comments; Restructuring Plans, Company Moratorium and Restriction on Ipso Facto (Termination) Clauses. Sub-headings are incorporated in the Findings for each of the CIGA measures addressing the Main Research Questions to inform the PIR.

An Overseas Perspective is included as a common theme of interviews was how the UK regime now compares to other jurisdictions.

The Interim Report collates the data gathered with the interpretation of the research team, in order to provide conclusions against the main research questions. In drawing conclusions from the data, the research team is not making recommendations.

Following this report, the University of Wolverhampton will begin Stage Two, which is set to involve an online survey to IPs, as well as further interviews. The Insolvency Service will then consider the evidence both from this report, and the report that follows Stage Two, when writing the PIR. The PIR is due in June 2023 and will consider if any refinements or changes need to be made, based on the evidence.

2. Background

CIGA was introduced by the Government with the overarching objective to provide companies with the flexibility to be able to continue trading during and after COVID-19. It did this with a mixture of temporary easements to insolvency law, coupled with a package of permanent measures to maximise the survival prospects of viable companies.

Throughout the COVID-19 pandemic overall numbers of company insolvencies remained low when compared with pre-pandemic levels, which was likely to have been driven in part by Government fiscal and other measures that were put in place to support businesses. These measures included temporary restrictions on the use of statutory demands and certain winding-up petitions as well as enhanced financial support to companies by way of a range of Government backed loans, tax breaks [More information available at: COVID-19 financial support for businesses - GOV.UK (www.gov.uk)] and the Coronavirus Job Retention Scheme (Furlough Scheme) [The Coronavirus Job Retention Scheme or Furlough Scheme provided employers with a grant to be used to cover wages of employees on the payroll that were on temporary leave due to the COVID-19 pandemic. More information available at: https://www.gov.uk/guidance/claim-for-wage-costs-through-the-coronavirus-job-retention-scheme].

CIGA is the most significant change to the UK’s corporate insolvency regime in 20 years [Major changes to insolvency law come into force. GOV.UK. 29 June 2020. Full News Story available at: https://www.gov.uk/government/news/major-changes-to-insolvency-law-come-into-force]. Prior to CIGA, UK insolvency law had a number of tried and tested options for business rescue, but there were gaps when compared, for example, to best practice standards published by the World Bank [Law reform initiatives were often informed by the World Bank’s Ease of Doing Business Report before the World Bank discontinued the publication thereof in 2020. The Ease of Doing Business indicators and previous reports can be accessed here: https://www.worldbank.org/en/programs/business-enabling-environment] and the 2019 EU Restructuring Directive [Directive (EU) 2019/1023 of the European Parliament and of the Council of 20 June 2019 on preventive restructuring frameworks, on discharge of debt and disqualifications, and on measures to increase the efficiency of procedures concerning restructuring, insolvency and discharge of debt, and amending Directive (EU) 2017/1132 (Directive on restructuring and insolvency). Available at: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex:32019L1023]. Changes in the insolvency regimes in several different countries showed a general convergence in the principal features of restructuring and rescue frameworks of sophisticated market economies. The UNCITRAL Legislative Guide on Insolvency Law [UNCITRAL Legislative Guide on Insolvency Law. Available at: https://uncitral.un.org/en/texts/insolvency/legislativeguides/insolvency_law] sets out provisions which are now seen as core components of a modern insolvency regime. Those core requirements include a reorganisation plan, a stay of enforcement action and the treatment of executory contracts.

With these international developments in mind, the Government had previously consulted on a range of reforms to the insolvency framework between 2016 and 2018 [A Review of the Corporate Insolvency Framework: Consultation outcome Available at: A Review of the Corporate Insolvency Framework - GOV.UK (www.gov.uk)]. As part of its response to these consultations the Government announced that it would implement the measures when a suitable legislative vehicle became available.

The three permanent CIGA measures considered by this evaluation are:

2.1. The Restructuring Plan (RP)

The RP is a new restructuring procedure which may be proposed by a company in financial difficulties. Under it, creditors are divided into separate classes, by similarity of rights and interests, by the proposer. After class division is approved by the court, the respective classes of creditors (and shareholders, if relevant) vote on the proposed RP. The RP will bind all classes of creditors (and shareholders) if more than 75% of creditors, by value, in each class vote in favour. If, however, not all classes vote in favour, a process known as ‘cross-class cram down’ can be sanctioned by the court, notwithstanding the votes of the dissenting class(es). This can only take place if at least one ‘in the money’ class of creditors has voted in favour and the court is satisfied that no member of a dissenting class is worse off than they would be in the relevant alternative (likely to be an insolvency procedure such as administration or liquidation).

CIGA introduced the RP with the insertion of a new Part 26A of the Companies Act 2006. Its provisions are largely based upon the provisions Part 26 of the Companies Act 2006 which allows a company to propose a Scheme of Arrangement (Scheme) to its creditors (and shareholders) whether the company is in financial distress or not. The various temporary measures in relation to the COVID-19 Pandemic, to support businesses from insolvency during the pandemic, may have contributed to a slow start in the uptake of the RP. Between 26 June 2020 and 28 February 2022 12 companies had a RP registered at Companies House [Official Statistics. Monthly Insolvency Statistics February 2022. GOV.UK. 15 March 2022. Available at: https://www.gov.uk/government/statistics/monthly-insolvency-statistics-february-2022/commentary-monthly-insolvency-statistics-february-2022].

The RP had four primary policy objectives, the logic models for which can be seen in Annex A:

• To address the scenario where a secured creditor can block a company rescue, despite the proposals being well supported.

• To enable courts to sanction restructuring plans where it is fair and equitable to do so.

• To enable companies with viable businesses that are struggling to meet debt obligations, to restructure with limited disruption to their operations.

• To provide an alternative measure to a scheme of arrangement in cases where the agreement of all classes of creditors is unlikely (as schemes do not provide any mechanism for ‘cram down’ between classes).

2.2. Company Moratorium

The Moratorium provides struggling companies a short period of protection, initially 20 business days, from creditor enforcement action during which they can seek advice and agree plans for their rescue as a going concern. This protected period is designed to give companies a better chance of survival. The primary legislation for the Moratorium is found in Part A1 of the Insolvency Act 1986 which effectively replaced the previous Schedule A1 moratorium which only applied to small companies and was little used in practice. According to Insolvency Service monthly statistics 33 Moratoriums were obtained between 26 June 2020 and 28 February 2022 [Official Statistics. Monthly Insolvency Statistics February 2022. GOV.UK. 15 March 2022. Available at: https://www.gov.uk/government/statistics/monthly-insolvency-statistics-february-2022/commentary-monthly-insolvency-statistics-february-2022]. As with RPs, the relatively low number of Moratoriums can be linked to the overlap between the CIGA permanent measures and the COVID-19 temporary measures mentioned above. It is conceivable that some companies that would have been able to make use of the Moratorium might not have done so due to other Government support measures still in place at the time. However, there seems to be a steady increase in the use of the Moratorium.

The Moratorium had four primary policy objectives, the logic models for which can be seen in Annex A:

• To provide companies a period of protection so they can seek advice, negotiate with creditors and agree plans for their rescue as going concerns.

• To enable companies using the Moratorium to benefit from greater opportunities for company survival.

• To provide companies using the moratorium enough time during a “breathing space” to consider the best option for the company.

• To ensure that all struggling companies that meet the eligibility criteria should be able to use the moratorium.

2.3. The Suspension of ipso facto (termination) clauses

Section 233B of the Insolvency Act 1986 generally prohibits the enforcement of ‘termination clauses’ in contracts for the supply of goods and services that engage upon an insolvency event. This means suppliers must continue to fulfil their commitments under contract with the debtor company in the event of it entering a formal insolvency. It is more extensive than the existing provisions found in ss 233 and 233A in terms of the types of contracts affected. Due to its nature, there are no available statistics to reflect the level of engagement with this measure.

The suspension of ipso facto (termination) clauses had three primary policy objectives, the logic models for which can be seen in Annex A:

• To prevent companies in insolvency procedures from being held ‘hostage’ by suppliers either by withdrawing supply completely or that ask for additional “ransom” payments.
• To provide a valuable tool to support company rescue and thereby provide better returns to creditors.
• To mitigate the transference of risk onto suppliers, via a statutory ‘hardship provision’ to protect suppliers that cannot (rather than will not) supply.

It should be noted at the outset that the Government pandemic-related interventions in the economy have likely had a significant impact on the level of engagement with the three permanent CIGA measures. The data collected should therefore be considered against this backdrop.

It is expected that the end of all Government interventions on 31 March 2022 will see a rise in cases utilising the three permanent CIGA measures.

3. Methodology

As part of good policy making and in line with the Better Regulation framework a PIR of the new permanent measures will be required. Whilst the PIR will be written by the Insolvency Service, the University of Wolverhampton was commissioned (following fair and open procurement) to contribute to the evidence base that will inform the PIR. The research team brings with it experience of conducting a number of qualitative and quantitative research projects in the area of insolvency and corporate restructuring. The research team is independent of the Insolvency Service but brings with it decades of experience of academic and practical study of the law in this area.

3.1. Research Design

The main research questions which will inform the PIR of the CIGA measures are:

1. To what extent have the policy objectives been achieved?

2. Did the benefits of the measures outweigh the costs?

(NB this research question is intended only to collate evidence to inform a value for money evaluation that will be conducted by the Insolvency Service in-house as part of the PIR).

1. Were there any unintended consequences?

2. What worked well and less well?

3. Could the measures be improved upon?

4. How did external factors influence the delivery and functioning of interventions?

Separate research questions specifically considered the impact on employees’ interests:

1. What is working well, less well and why?

2. What could be improved?

3. How has context influenced delivery?

To address the research questions, it was decided that a process evaluation [The Magenta Book: Central Government guidance on evaluation. London. Crown Copyright. Available at: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/879438/HMT_Magenta_Book.pdf], utilising a mixed methods approach would be suitable. This approach will not quantify the impact of the measures, or allow causality to be inferred. Such approaches were ruled out, for example, due to the difficulties in estimating a counterfactual as noted in the CIGA Impact Assessment [Corporate Governance and Insolvency Bill Impact Assessment: (parliament.uk)]. However, the process evaluation approach will provide learnings around how the measures are working to inform future policy making. Furthermore, this approach enabled the research to be flexible in adapting to potential impacts from the pandemic.

The first part of the evaluation is covered in this report. It involved qualitative research, in the form of in-depth semi-structured interviews (Stage One) and ran from September 2021 to March 2022. The second part of the evaluation (Stage Two) is expected to utilise an online survey of IPs and further semi-structured interviews which will run from March 2022 until August 2022.

The evaluation commenced with qualitative research to make the most of serendipitous findings whilst the CIGA measures continue to unfold. Understanding the “who”, “why” and “how” questions considered in qualitative research will help understand if the measures are working as intended and can also inform the quantitative assessment in Stage Two.

Semi-structured interviews were deemed appropriate as they are a flexible research tool. The interviewer has a number of specific questions and exercises discretion in the manner in which the questions are asked and the order in which they are asked. Semi-structured interviews can have the advantage over structured interviews as they allow for the acquisition of detailed views but also allow those being interviewed to express views in their own words on the areas being evaluated (or related areas).

The research team conducted the interviews by asking a series of questions broken up into four sections dealing discretely with, respectively, General Questions on the CIGA measures, Part 26A RPs, the Moratorium and Ipso Facto clauses. The interview questions were designed to address the main research questions, the answers to which are interpreted and used to evaluate the CIGA measures for the purposes of the PIR.

3.2. Sample

The aim of qualitative research is to provide an in-depth understanding of a phenomenon rather than to establish its prevalence, probability or causality. It concentrates on considering breadth and depth rather than scale. Stage One therefore required an approach to the sampling of potential interviewees which would enable the research team to gather a wide variety of valid perspectives.

The research identified the populations of interest as IPs, legal professionals and trade associations. Those selected for interview were purposively sampled, a sub-strand of which is expert sampling, whereby participants are recruited due to a high degree of knowledge about the study area. Interviewees were therefore asked to participate based on their characteristics of having knowledge and/or experience of the CIGA measures. However, some participants were recruited outside of these criteria, to capture a variety of views, such as from those who may have avoided using the measures for certain reasons.

A cross-section of the IP profession was identified which had knowledge or experience of the CIGA measures. For example, all the IPs who the research team knew had acted as Monitors of a Moratorium up to the end of January 2022 were contacted. Similarly, experienced IPs from different parts of the market who engage in policy and technical matters nationally and internationally were approached. Lawyers and IPs who had acted in relation to RPs were contacted along with lawyers whose profile includes engagement with policy and technical matters. Trade associations who had participated or commented on the pre-CIGA consultations and debates were approached.

As at the end of March 2022, 37 IPs had been approached of whom 13 had been interviewed; 15 lawyers had been approached resulting in 14 interviews; and 6 trade associations had been approached, all of whom were interviewed.

3.3. Data Collection

The qualitative research was conducted virtually via a series of in-depth semi-structured interviews with IPs, lawyers and trade associations. The interviews were conducted either by Professor Peter Walton or Dr Lézelle Jacobs.

Due to the Covid-19 pandemic it was appropriate to conduct the entire data collection remotely, therefore interviews were conducted using Microsoft Teams. Where an interviewee consented, the interview was recorded and a verbatim transcript of the interview was generated via Teams. Where a recording was not made, the interviewer took notes during the interview.

All interviewees (and trade bodies) were asked to complete a consent form which explained that all interviews would remain confidential unless those being interviewed wished to have certain views attributed to them. Only the research team of Professor Walton and Dr Jacobs have access to the recordings, transcripts and notes.

Although the large majority of the qualitative research was conducted using semi-structured interviews of individuals, the views of trade bodies were obtained by way of roundtable discussions with members of the respective bodies. The questions posed at the roundtable discussions were based upon the questions used in the semi-structured interviews. All those taking part in interviews or discussions were provided prior to the interaction with a topic guide which is replicated at Annex B.

Semi-structured interviews can vary in the degree to which items are fixed or are flexible. In this case, interviewees (and trade bodies) did not always have extensive experience or views on each of the CIGA provisions. Therefore, the use of semi-structured interviews permitted flexibility about which of the CIGA provisions the interviewee (or trade body), due to their specific knowledge or experience, wished to concentrate on. Nevertheless, all participants were asked general questions on each of the CIGA provisions first. The interview either then: i) proceeded to discuss the CIGA provisions in the following order: RPs, Moratoriums and Ipso Facto provisions; or ii) where there was specific knowledge of, or experience in, one particular CIGA provision, the interview or roundtable discussion moved directly to that topic with the other provisions being touched upon later and usually in outline only.

The interviews lasted for between 30 minutes and one hour.

The main themes from the data collection are considered below under the Findings heading where there are four separate sub-headings for the CIGA measures, namely, General Comments on the CIGA measures, Part 26A, Moratorium and Ipso Facto. Under each of the sub-headings, there is first an account of the data collected (“Data”). The data presented are the substantive answers we received from the interviews and trade bodies. This is then followed with some analysis or interpretation of that data by the research team (“Interpretation of the data”).

3.4. Analysis

The consent forms, a spreadsheet with the details of those contacted and interviewed and the data from the interviews (or group discussions) were retained and are stored on a shared University of Wolverhampton drive to which only the research team has access.

A thematic analysis was carried out considering answers to the interview questions. Familiarisation with the data and analysis began as interviews were ongoing. The questions used in the semi-structured interviews were each linked to specific research questions. The thematic analysis was therefore framed around the research questions.

A number of initial codes were developed as the interviews progressed and this list was added to as more data became available. The list of codes was kept by the research team in a document on their shared drive to which each added as more data became available. The list of codes resulting from the data was then collated into themes. Some of the codes were identified as themes in their own right whilst others were collated with one another to form a theme. As the interviews proceeded, a number of common themes under each of the research questions was identified. These themes appear as sub-headings to the research questions in the Findings reporting.

Where interviews were recorded, the transcripts were analysed to identify the list of codes. Where there was no transcript (due to the interview not being recorded) the interviewer’s notes were similarly analysed. In each case the interviewer noted common themes. Each member of the research team has access to the other’s transcripts and notes which are stored on a shared drive. The research team met to discuss the results after each interview and to discuss the codes and themes identified. By discussing the codes and resultant themes, and by reading through each other’s transcripts and notes, the research team was able to ensure a consistent approach to theme identification.

There was generally a strong degree of agreement between IPs and lawyers. Where there is any significant divergence of opinion this is considered in the respective Interpretation sections of the Findings below. As part of the analysis of the interview data the research team considered whether the interviewees were expressing views based upon their own experience of the CIGA measures or their own understanding as to how the measures might operate.

It is recognised that trade bodies represent their members and will therefore tend to show bias in favour of their members’ interests. This was taken into account by the research team when analysing the feedback from trade bodies. It became apparent to the research team that by the end of February 2022, the interviews were no longer producing any significant new data. As explained above in the Background section, due to the necessary and effective pandemic-related Government interventions in the economy, there have been fewer corporate insolvencies since CIGA came into effect than in normal times. There have not been many RPs and Moratoriums. Similarly, there have been far fewer Administrations and CVAs than normal [Official Statistics. Monthly Insolvency Statistics February 2022. GOV.UK. 15 March 2022. Available at: https://www.gov.uk/government/statistics/monthly-insolvency-statistics-february-2022/commentary-monthly-insolvency-statistics-february-2022]. The research team believes that up to this point the data produced by the interviews reached data saturation, meaning that new data was repeating what was expressed in the earlier data. No new themes are likely to emerge from the data collected until practice develops further.

It is likely that, as the economy returns to normal, the use of the CIGA measures will increase. The research team intends to continue to interview more IPs, lawyers and interested bodies as part of Stage Two as it is possible that new data will become available as practice continues to develop.

3.5. Reporting

In the Findings section below, the data generated from the interviews (and roundtable discussions) is reported first (under the sub-heading “Data”) and this is followed by the research team’s analysis of that data (under the sub-heading “Interpretation of the data”).

In reporting the data, the research team sometimes has chosen to synthesise or summarise the views or experiences of interviewees with similar opinions to create typical or illustrative points. The research team has prioritised common or insightful themes when reporting findings. In doing so, it is recognised that some of the nuance between interviewees may be lost. However, some themes have been identified based upon, for example, one interviewee, where the theme is particularly interesting or insightful.

Several themes identified from the interviews receive support from a number of other sources. CIGA has produced a number of learned journal articles, reports, blogs and webinars dedicated to its measures. The research team has considered such sources, and they have been used as a form of triangulation to assist in interpreting or validating the interview data.

3.6. Uncertainties and Limitations

It is recognised that the role and purpose of this qualitative research are not intended to be representative of, or generalisable to, the wider population. Instead, its purpose here is to provide an in-depth understanding of how the policy is working.

Due to the purposive sampling applied to the interview process, it has been possible to obtain data from those most experienced in, and knowledgeable of, the CIGA measures. However, one limitation of the interview process in Stage One has been the reluctance of many IPs who did not wish to be interviewed due to their lack of practical experience of the CIGA measures up to this point.

Where costs of proceedings are reported, this is based upon the data provided by IPs or lawyers with experience of the costs in such cases (unless otherwise stated). As there have been relatively few cases using the CIGA measures up to this point, the costs cited may be different in future as practitioners become better acquainted with what each of the new measures entails.

The research team recognises that due to its previous experiences as impactful researchers in insolvency law and restructuring, there is a potential risk that its own views may influence both the data collection and analysis of the data. To similar effect, as well as being aware of the need for reflexivity, the research team is conscious of the risk of confirmation bias when interpreting data, in terms of evidence confirming its own existing views or those of others articulated in media outside of the Stage One interview process, for instance, in articles, reports, blogs or webinars.

The use of semi-structured interviews mitigates against these risks in the data collection process, as the questions being asked are directly linked to the main research questions. The analysis of the data is limited to the themes raised by interviewees and the research team has attempted to remain objective in its assessment of those themes.

The use of semi-structured interviews also carries the risk of social desirability, whereby participants may look to present themselves in a favourable fashion. However, this risk is mitigated to a degree by the research being conducted independently of the Insolvency Service.

3.7. Ethics

The methodology received ethical approval from the University of Wolverhampton’s Faculty of Arts, Business and Social Sciences Ethics Committee on 12th October 2021.

4. Findings

When considering the findings, it is important to be aware of the uncertainty and limitations mentioned in section 3.6.

4.1. General comments on the CIGA measures

Data

• CIGA Consultation process

The consultation process which led to the CIGA measures was generally described as being adequate and allowed relevant stakeholders to voice their concerns and to engage with the proposed reforms. However, the opinion was expressed that the consultation process did not cover how the measures might operate in practice, especially the RP.

• General guidance

Government guidance leaflets that are available are helpful but contain mostly general information. There is a need for more specific guidance.

• Ease of understanding

Some interviewees expressed the opinion that the new measures were not easy to understand without the assistance of expensive legal advisors. An unintended consequence of this is that only businesses that can afford “good professional advice” will not struggle to understand the measures. Some smaller companies might be excluded from this group.

• Reception

The CIGA measures have been described as increasing the regime’s “restructuring firepower”.

Similar to when major changes were brought in by the Insolvency Act 1986 and the Enterprise Act 2002, there has been some uncertainty about how each provision operates. This has resulted in some hesitancy to utilise the CIGA measures although this may be beginning to recede as the benefits of the provisions are becoming clearer. Members of the insolvency profession stated that they believed the profession to be committed to doing its best to consider and use all viable options to save viable companies and jobs.

The new measures have created one new statutory role (that of Monitor of a Moratorium) and functions for IPs which differ from those which are traditionally understood by creditors (for example, it is common to appoint one or more Plan Managers for an RP). The uncertainty created by this sense of newness is a possible factor in why a measure such as the Moratorium has not yet been fully engaged with by the IP profession.

Although the UK insolvency market is often seen as driven by creditors, it is becoming more debtor-friendly with the introduction of the CIGA measures.

There is a strong feeling of confidence in the judiciary to interpret and apply the provisions in a commercial way [The feeling of confidence expressed by interviewees emphasises the UK’s commitment to the best practice principles in relation to the judiciary. The European Bank for Reconstruction and Development Core Principles of an Effective Insolvency System - Principle 12: “An effective insolvency system should ensure that the courts concerned with insolvency proceedings have the necessary expertise to deal with proceedings in an efficient and expeditious manner”. The International Monetary Fund ‘Orderly and Effective Procedures’ state: “To ensure that an insolvency law is applied with predictability, the law should provide adequate guidance on how the court should exercise its discretion, particularly when the court’s decision involves an assessment of economic and commercial issues.” Available at: https://www.imf.org/external/pubs/ft/orderly/index.htm#institu].

Interpretation of the data

There has been a broadly positive reaction to the CIGA measures. No alternative procedures were identified by interviewees which would have been preferable to the introduction of the CIGA measures in the context of the pandemic. The CIGA measures were the right measures to introduce at the time. The interviewees who had used the new measures thought that they worked well to achieve their policy aims. However, there are some specific issues identified pertaining to individual measures. These are addressed in the following sections.

The CIGA measures remain largely untested in practice by many practitioners (IPs and lawyers). This is partly due to a general reluctance of many to be the first to try entirely new procedures but is also due to the Government support for businesses during the pandemic that greatly reduced the need for companies to restructure up to now. The comparison was made to the general reluctance of practitioners (IPs and lawyers) to make use of the CVA and administration procedure when these procedures were introduced in 1986. Statistics for this period seem to confirm this statement [Statistics on the use of CVAs, Administration and Administrative Receivership in 1986 and 1987 are available at: https://webarchive.nationalarchives.gov.uk/ukgwa/20140716212200/http:/www.insolvencydirect.bis.gov.uk/otherinformation/statistics/historicdata/HDmenu.htm].

RPs have been readily embraced by practitioners involved in the restructuring of large companies. Use of Moratoriums appears so far to have been limited to the SME market. One interviewee commented that the restructuring market was like a dartboard representing all companies with only the bullseye (large companies) currently making use of the RP [According to official statistics SMEs account for 99.9% of the business population (5.6 million businesses) with only 7,700 large businesses. Statistics available at: https://www.gov.uk/government/statistics/business-population-estimates-2021/business-population-estimates-for-the-uk-and-regions-2021-statistical-release-html]. Although the number of companies making use of the Moratorium appears to be high in comparison to the RP, many of these companies appear to be connected or part of a group structure.

The law and practice on RPs build upon well-established principles under Schemes and so RPs have been easier for practitioners to adapt. The leap between RPs and Schemes has not been insignificant but it is an area of practice where those experienced with Schemes have felt comfortable in extending their expertise and experience to RPs.

Moratoriums (as a standalone procedure) are essentially brand new to practitioners. There are concerns about using something so new without the relative comfort provided by the existence of pre-existing case law guidance and practical experience. Although the Moratorium has some things in common with the repealed CVA-specific moratorium under Sch A1 of the Act, that type of moratorium was seldom used [P Walton, C Umfreville and L Jacobs, Company Voluntary Arrangements: Evaluating Success and Failure. May 2018. R3 Research Report].

Due to the significant Government interventions during the pandemic, the new Ipso Facto provision has not yet been fully utilised by IPs. Now that the Government protections for businesses are fully withdrawn, it is likely that IPs will begin to rely more frequently on the Ipso Facto provisions to ensure continued supply of goods and services to distressed companies. The pre-CIGA approach, which required IPs often to negotiate with individual suppliers to ensure continued supply, is beginning to alter as IPs start to rely on the Ipso Facto provisions to assure supply.

It is conceivable that the new roles of IPs in the CIGA measures might be unfamiliar to the public and members of the professions alike. This concern is likely to reduce as IPs and others become more familiar with the CIGA measures over time.

There was no suggestion from anyone that there was any malpractice or non-compliance issues with the CIGA measures.

4.2. Part 26A Restructuring Plan

Key findings

• The policy objective of addressing the blocking of well-supported restructuring proposals by certain creditors has been met.
• The cram down power has been used successfully in cases where previously a Scheme on its own would not have been effective.
• The RP builds on existing case law governing Schemes of Arrangements (Schemes), this has been of great assistance in the early cases and will surely remain helpful as more companies attempt to use this measure.
• RPs are seen as too costly and time-consuming for use by all sizes of company.
• RPs could be improved whereby simple cases might be dealt with in a single hearing by an Insolvency and Companies Court judge.
• The costs of challenging a RP are seen as excessive which hinders the policy objective of protecting dissenting creditors.
• Without greater disclosure and transparency requirements the envisaged protection of creditors will be diminished.
• The primary legislation governing RPs might be made more attractive when compared to overseas jurisdictions.

Successful RPs appear to have resulted in job losses being avoided.

4.2.1. To what extent have the policy objectives been achieved?

Data

The Part 26A RP is seen as largely successful in achieving its policy objectives. It has been described as:

“a fantastic initiative” – IP

and “really excited” and “particularly useful” - IP

Its apparent success is partly due to the ability of the courts to build on a wealth of case law on Part 26 Scheme cases and recognise differences where they exist. The bedrock for a strong body of informative case law was already in existence.

• The cram down

There are examples from case law where classes of creditor (whether secured or unsecured) have not been able to block a company rescue. The courts have used the power in Part 26A to cram down dissenting classes (Re Amicus Finance plc [[2021] EWCH 3036 (Ch)] is an example of a secured creditor being crammed down).

IPs and lawyers have received helpful guidance from the case law and have a generally clear view as to what is expected when putting a Part 26A RP to creditors and to the court.

The mere availability of the cram down power influencing the negotiating dynamics was noted as a positive contribution to the ability to attempt a restructuring.

To continue to be seen as a leading restructuring jurisdiction, the UK needed a cross-class cram down provision.

• Protection of dissenting creditors through court sanction

Concerns are expressed regarding adequate protection for dissenting creditors. A lack of information available to creditors and excessive costs involved in challenging the approval of the RP are submitted as concerns, a lawyer made the following comment:

“It’s hard to challenge a Scheme or Restructuring Plan because often the information is provided to those dissenting creditors or creditors who are likely to be dissenting at quite a late stage.”

At the stage when creditors receive detailed information, the RP may be so well-formulated that it may be difficult to propose a viable alternative (see Re Virgin Atlantic Airways Ltd) [[2020] EWHC 2191 (Ch) at [67]].

Creditors, including landlords, see some RPs as being dependent upon valuation evidence which may contain commercially sensitive information.

The “vertical” relevant comparator test (which takes account of the priority of different classes of creditor) may be seen as inadequate always to protect the interests of dissenting creditors. A more sophisticated test may be needed. Although a class of creditors might not be any worse off under the RP than they would be in an administration, there might be a situation where other classes of creditors are far better off under the RP than they would be in an administration.

Interpretation of the data

The general opinion of interviewees was that the RP has met the policy objectives of the measure. The possibility to rely on the case law as it pertains to Part 26 Schemes was highlighted as a particularly positive development. The ability of the courts to draw on the existing body of Scheme case law to the extent relevant, including in respect of issues relating to class composition, third party releases and the relevant comparator added a level of certainty to the unfamiliar, new RP and possibly contributed to the fact that it was initially more readily engaged with than the other CIGA measures.

The cross-class cram down was well received and was thought to provide a mechanism to halt the blocking of otherwise well-supported proposals. As noted, the opinion was expressed that the UK needed a cross-class cram down provision to stay competitive as an international restructuring hub. Arguably this opinion is informed by recent developments in restructuring in other parts of the world with a cross-class cram down being included in various recent international reform initiatives (e.g. Singapore, the Netherlands and Germany – for which see Part 5 below). Without the cram down mechanism, it was feared that distressed companies might not consider the UK when deciding where to initiate insolvency proceedings and it would therefore have lost a competitive edge to other jurisdictions with restructuring tools with the mechanism.

Whilst policy objectives have broadly been met, the objective of providing adequate protection for dissenting creditors may not have been met in full. Interviewees were concerned with the level of disclosure as well as the cost of challenging an approved RP. Creditors may not always have access to commercially sensitive information, or if they do have access, they may not have sufficient time to refute the evidence. Some RPs may be seen as a foregone conclusion, which the court has little choice but to approve.

There seems to be a potential unfairness in the operation of the relevant comparator test. The topic of the relevant comparator has enjoyed some academic attention with mention being made of similar concerns raised by interviewees as to the shortcomings and fairness of the test. Academic outputs refer in this regard to the “restructuring surplus” which asks whether members of the dissenting class would share in the restructuring surplus with due regard to those members’ contribution to the creation of said surplus [Riz Mokal, ‘The court’s discretion in relation to the Pt 26A cram down’ (2021) 36(1) Butterworths Journal of International Banking and Financial Law 12-16].

4.2.2. Did the benefits of the measures outweigh the costs?

Data

RPs are viewed as a version of the Scheme. Rather than retaining the Scheme it may have been clearer to stakeholders if CIGA had replaced creditor Schemes with RPs rather than merely adding a new process with the retention of creditor Schemes.

One interviewee whose firm tracks both these procedures noted that the number of Schemes compared with the number of RPs appeared to be equal in the first half of 2021.

Turnover of companies applying for a RP vary between at the top end, £3bn down to £27m. Most have a turnover of over £100m and they usually involve new money being introduced into the company. All involve some amendment to the terms of the debt owed. Some also involve a debt – equity swap with some requiring some debt being written off. Some have seen not just financial debt being restructured but also have enabled an operational restructuring.

The inherent cost of the measure is seen as a real problem for the SME market. The cost for a straightforward SME RP is estimated to be around £100,000 - £150,000 (although it may be possible to complete a RP more cheaply). It is difficult to see RPs becoming commonplace in the SME sector due to the expense. Although the typical costs of a CVA are likely to be £25,000 - £35,000, this may be a false economy if the CVA is subsequently challenged.

The costs involved in challenging the approval of a RP may be seen as “excessive” and start to accumulate even before a creditor gets to court.

Interpretation of the data

The cost involved with all aspects of the RP was a recurring theme amongst interviewees, with most expressing concerns about the costs influencing the accessibility of the measure by different sizes of companies. The companies that have made use of the measure tend to be larger companies with high turnovers. It seems like the SME sector has not engaged with this measure in most part due to the cost associated with the procedure.

In comparing the use of the RP to that of the Scheme, it appears that the introduction of the RP may not have expanded the number of companies using the reorganisation procedures under the Companies Act 2006. It may be the case that some companies that would have previously used a Scheme have instead opted to use a RP as reorganisation procedure. There may not be very many companies using the RP who would not, in the past have used a Scheme (possibly combined with some other procedure). The overall number of companies who previously would have used a Scheme may therefore be similar to the overall number of companies now using either a Scheme or a RP. It is therefore possible that the RP has replaced the Scheme to some extent instead of opening up new opportunities where before no restructuring was possible. Having stated that, it is clear that the RP has been used enthusiastically and is seen as more effective than a Scheme in certain circumstances.

It is possible that costs will decrease as lawyers become more experienced in drafting the plan.

4.2.3. Were there any unintended consequences?

Data

Certain classes of creditor believe that the RP process can be used unfairly. For example, if at the time of the convening hearing the company is able to prove that the creditor “would get nothing” in the relevant alternative, then any changes to leases and other executory contracts appear capable of being enforced. However, “these things are planned months and months in advance.” If the company times the hearing to coincide with when it becomes insolvent, creditors who are ‘out of the money’ may be ignored and the RP presented to the creditors will get sanctioned without the judge intervening. The requirement for a RP to be fair to all creditors may require further judicial or policy consideration.

Due to the “excessive” costs involved in challenging a RP in court they may often be seen as effectively “unchallengeable”. A challenge to a RP might be almost impossible without at least two expert witnesses.

Interpretation of the data

Although it is conceivable that a company might wish to time its application strategically, it is accepted that the judiciary is well placed to consider the role the timing of the application played when exercising its discretion and considering the interests of creditors. It is also accepted that a creditor would be able to challenge the application should it feel disenfranchised by the timing.

However, the costs involved in challenging the application results in only certain creditors being able to afford the opportunity to protect their interests through such a challenge. The need for the use of expert witnesses drives up the cost of the challenge and so is likely to make such challenges less straightforward.

4.2.4. What worked well and less well?

4.2.4.1. What worked or is working well?

Data

The role and involvement of the court is seen as a positive and might be contrasted with a CVA where the court only becomes involved if the CVA is challenged after its approval. The judicial oversight and sanction requirement for a RP offers reassurance to stakeholders.

The fact that there is a vast amount of inherited jurisprudence on Schemes is seen as helpful in navigating the new procedure. Only one proposed RP has been refused the court’s sanction so far (Re Hurricane Energy plc [[2021] EWHC 1759 (Ch)]).

The absence of the Scheme’s numerosity requirement (the need for a majority in number of creditors as well as a 75% majority in value) in approving a RP is seen as a positive development.

Interpretation of the data

The RP was generally viewed as a welcome addition to the restructuring offering in the UK. However, the research team received various suggestions regarding how the RP could be adapted or tweaked to improve the delivery and functioning of the measure as well as some suggestions as to how the few concerns that were raised could possibly be addressed. These suggestions are discussed in more detail in 4.2.4.2 and 4.2.5 below.

On balance the RP received positive reviews from interviewees with experience of the measure.

4.2.4.2. What worked or is working less well?

Data

• Burden on Business

As mentioned above, both the costs involved in a company putting together a RP and the costs involved in a creditor’s challenge to the RP are seen as problematic.

A lawyer with experience of RPs noted that “Restructuring plans are phenomenally expensive.”

The costs of a RP are at the top of the market and are estimated to be in the region of £2m - £10m. In the mid-market the costs are estimated to be between £1m and £2m. On similar facts, if a Scheme were to be used, it would likely be about 1/3 cheaper but without the (threat of the) cram down power it may not be successful.

The additional costs are due to the more detailed valuation evidence which is needed for a RP than a Scheme. In several RP cases, had a Scheme been used, a further process, such as an administration or CVA, might also have been needed alongside the Scheme, as was sometimes the practice before the introduction of the RP. The suggestion was made that overall the costs are likely to be broadly equivalent in an RP as they would be in a Scheme with the addition of a further process.

The costs of a challenging creditor are significant. In one large case they were approximately £1m. In Re Amicus Finance plc [[2021] EWHC 2255 (Ch) at [135]], a mid-market company, the costs of the challenger were £165,000.

In addition to the expense of producing the necessary documentation to support or attack a RP the cost of senior Chancery counsel has added substantially to the overall costs involved.

• Information asymmetry

There is a perceived problem with creditors having adequate access to information. Documents can be quite formulaic with similar provisions being used in RPs and Schemes which have been effective in earlier cases. The timing of the hearings may not allow for creditors to ask enough questions to enable a sensible attack on the plan to be made. The asymmetry of information makes it difficult for a creditor to put forward an alternative. It will also struggle to attack any valuation evidence without carrying out its own valuation exercise which may be difficult in the timeframe available.

• Inappropriate clauses

There is some suggestion that some clauses included in RPs are potentially inappropriate. The example provided was a clause which releases the company’s directors from potential liability to creditors for actions in the previous 12 or 24 months.

Interpretation of the data

Despite the generally favourable views of the measure, concerns were raised in relation to the burden on business and access to information in particular.

The variation in costs can be attributed to the size of the company wishing to make use of the RP. Where a company’s turnover is £3bn, the costs of a RP are estimated to be around £10m. Where the turnover is between £20m and £100m the costs are estimated to be between £1m and £2m. The need for two court applications, two hearings and cost of counsel as well as required valuation evidence drives up the costs of the RP. The concern raised was that the RP would not be accessible to all sizes of companies due to the associated costs. Where a proposal for a RP is not complex or contentious having to have two applications to court and two full hearings may be inappropriate in the SME market. Many of the suggestions for improvement received (see 2.4.5 below) by the research team concentrated on how this measure could be simplified in order to address the burden on business. The issue of costs was not only raised by interviewees with experience of the measure but also by interviewees with no experience explaining that the cost of the RP was a main reason for not using the measure where appropriate.

As mentioned in 4.2.3 the concerns regarding the costs involved with challenging the RP have also been raised. In Re Amicus Finance plc the total value of claims amounted to approximately £32m [[2021] EWHC 2255 (Ch)], whilst the costs of the challenger were £165,000. The concern being that only certain creditors would be able to avail themselves of the built-in protection offered by the RP.

The issue regarding adequate access to information seem to relate to the level of disclosure and the timing thereof (see 4.2.1 above). To enable creditors to make informed decisions, they need enough relevant information with reasonable time to consider the information against the proposals being made (see 4.2.5 below).

4.2.5. Could the measures be improved upon?

Data

Various suggestions were made by lawyers and IPs as to how they believe the measures could be improved upon and how the concerns could be addressed.

• Reduce the Burden on Business

A common suggestion on the improvement of the RP relates to the cost of the process:

“The cost of the process needs to be reduced significantly.” - IP

The following suggestions were made as to how the cost issues could be addressed:

The opinion was expressed that the R3 standardised form for SME CVAs has made a significant difference to the practical use of the CVA procedure. A similar standardised form or template for RPs might also lower the burden on business and make the measure more accessible.

To lower the burden on business the convening hearing for a SME RP could be dispensed with, in favour of having a single sanction hearing. A single hearing might also be an appropriate procedure where the debtor company elects for one and where the RP only involves one or two classes of creditor. Several overseas jurisdictions with equivalent procedures only require a single hearing (see Part 5 below).

The costs of the proceedings could be reduced by opening up the SME RP jurisdiction to ICC Judges (no longer limiting the decision to High Court judges).

It is hoped that as IPs and Lawyers become more experienced in the use of RPs the need to instruct only senior Chancery counsel will diminish. This should impact positively on the overall cost.

For SME RPs to become realistic options, applicants and judges need to be pragmatic and not see the need for huge amounts of evidence in a simple case [Similar comments were made by Mr Justice Zacaroli at a webinar in March 2022. Available at:

https://www.youtube.com/watch?v=jLTjIIrXV2g]. A RP could go through in weeks not months.

As valuation evidence was often seen as a major source of expense, it might be possible for a “single joint independent expert” to be appointed by the court as this would lower the burden on business for all stakeholders involved in the process.

• Transparency and disclosure

In order to address the perceived problem of creditors not having adequate access to information sufficiently early in the process there could be new rules introduced to ensure greater transparency and more disclosure options (e.g. in Re Virgin Atlantic Airways Ltd [[2020] EWHC 2191 (Ch) at [67]] where the possibility to request further information from the court file was discussed. The court ordered that notice should be given to the company when such an application is made if there is commercially sensitive information.)

It was suggested that the RP could include a Pre-Pack Pool equivalent as a measure to improve the fairness of the procedure without increasing the cost.

The procedure might benefit from similar connected party voting restrictions as apply in CVAs (under rule 15.34 of the Insolvency Rules 2016).

The perceived problems of information asymmetry and how to identify reliably the relevant alternative, it was thought that more detailed guidance on these matters might be useful.

• Consent Threshold

Although the numerosity test with Schemes does not apply to RPs, RPs still require a vote in favour to be passed by the relatively high bar of 75% in value.

• “Upside sharing”

A provision which might encourage more creditor support for RPs would be a requirement for creditors to receive some of the company’s future profit should the rescue be successful. There is a concern that creditors “lose out to ensure the survival of the company”. Creditors are expected to engage with the process without much incentive. Upside sharing could act as an incentive to creditors to lend their support.

• Qualification requirements

It might simplify the process to remove the requirement for financial difficulty and remediating the financial difficulty as gateways to jurisdiction under Part 26A (that is, by repealing s 901A).

A suggestion was made that the RP measure should consider allowing multiple debtor entities to be party to the same RP. This would provide an option to deal with certain obligations across the capital structures of complex groups.

• Recognition

The courts have to consider whether a RP will have effect in relevant overseas jurisdictions. This requirement might be omitted so that the RP would expressly include extra territorial effect. This is the case in other major restructuring jurisdictions (see Part 5 below).

Interpretation of the data

Various suggestions for improvement were made by interviewees with experience of the measure. The suggestions, although numerous, should not be interpreted to mean that the measure was viewed as ineffective, to the contrary, the measure was largely lauded by interviewees. The suggestions for improvement were not all accompanied by solutions as to how they could be achieved practically.

Addressing the burden on business received the most suggestions for improvement with some solutions being submitted.

A standardised form or template could reduce the costs and time associated with RPs significantly. A RP precedent for SMEs could look to SME CVA precedents rather than the documentation for a typical RP which is likely to be overly complex for the purposes of a SME.

Although the involvement of the court in the RP measure plays an important role in ensuring the protection of stakeholders’ interests and in particular the interests of the dissenting creditors it increases the burden on business in that the court must be approached twice. Moreover, an argument could be made that not all cases warrant two full hearings. This might be where the debtor is a SME or there are no complex debt structures or relatively few stakeholders.

There seems to be a great need to address disclosure and transparency in the RP. Snowden LJ recently commented on: “the complex and turgid documents which have often accompanied schemes and plans in recent years, which can serve as much to obfuscate as to reveal.” [Re All Scheme Ltd [2022] EWHC 549 (Ch) at [62]] In Re Virgin Active Holdings Ltd [[2021] EWHC 1246 (Ch) at [131]] the court suggested that it is entitled to expect of and require companies proposing a RP to cooperate in the timely provision of information. It also stated that there may be appropriate cases where information over and above that which can be sensibly contained on a concise explanatory statement should be provided to minimise disputes. Minimising disputes would also reduce the costs associated with challenging the RP. Evidently, the suggestion is being made that there should be increased disclosure with a high level of transparency [The European Bank for Reconstruction and Development (EBRD)’s Core Principles of an effective Insolvency System in Principle 14 states that modern, forward thinking insolvency systems should adopt digital tools to increase the transparency, efficiency and cost-effectiveness of insolvency procedures].

The suggestion regarding the pre-pack pool equivalent to address the issue of transparency would introduce an independent party to provide an opinion as to the fairness and suitability of the RP on the parties involved. This suggestion might decrease the number of challenges to the RP. However, it may introduce additional costs.

It is the researchers view that not much stands to be gained by adding any connected party voting restrictions, especially if Scheme jurisprudence is to remain helpful. The court will be able to spot any mischief in this regard and is well placed to address it effectively.

Suggestions for lowering the consent threshold seem mostly related to the UK maintaining a competitive place in the global restructuring scene. In considering the UK regime’s place internationally it may be useful to look at overseas’ jurisdictions where the majority required is either two-thirds or a simple majority. See the discussion of overseas jurisdictions at Part 5 below.

The suggestion to incentivise creditors through “upside sharing” could achieve its purpose and would also address the equitability of the RP when considering the relevant alternative/comparator [Riz Mokal, ‘The court’s discretion in relation to the Pt 26A cram down’ (2021) 36(1) Butterworths Journal of International Banking and Financial Law. 12-16].

It arguably serves little purpose to remove the requirement for financial difficulty and remediating the financial difficulty as gateways to jurisdiction as any insolvency-related concerns are necessarily imported through the ‘relevant alternative’ requirement in ss 901G and 901C(4).

To allow multiple debtor entities to be party to the same RP would, for example, simplify the procedure to introduce a lead company concept so that jurisdiction extends to affiliated companies. This would avoid the need to rely upon legal fictions in ensuring the court will hear the case (such as the procedure in Re AI Scheme Ltd [[2015] EWHC 2038 (Ch)] which has been adopted in subsequent cases).

4.2.6. How did external factors influence the delivery and functioning of interventions?

Data

Apart from the effect of the Covid-19 pandemic and the resultant Government initiatives to support business, no external factors influencing RPs were identified.

Interpretation of the data

There is no suggestion that external factors have influenced the functioning of the RP.

4.2.7. What impact has the measure had on employees?

Data

There are examples of the Part 26A cram down being used to allow operating companies to continue to trade. Sometimes the cram down is not needed (e.g. Re Virgin Atlantic Airways Ltd) [[2020] EWHC 2191 (Ch)] sometimes it is (e.g. Re Virgin Active Holdings Ltd) [[2021] EWHC 1246 (Ch)]. In both cases, strong businesses were saved along with thousands of jobs. A similar result may have been possible using some other process but Part 26A is seen, arguably, to have worked better in those cases than any other alternative.

Interpretation of the Data

The data suggests that when the RP is used it has been effective to save companies and, in the process, employment has been safeguarded. The Virgin Atlantic restructuring process resulted in 4,300 redundancies. However, at least as many roles were preserved by the company’s pursuit of an RP [Virgin Atlantic Annual Report. 2020. Available at: https://corporate.virginatlantic.com/content/dam/corporate/Virgin%20Atlantic%20Annual%20Report%202020_final%20v1.pdf at p 12 and 28].

4.3. Company Moratorium

Key findings

• The policy objective of providing greater opportunities for company survival appears to be working
• The Moratorium has been successfully used to provide a sufficient breathing space to allow companies to consider a plan for rescue as a going concern
• The 20-business day Moratorium, with provision for extension, on the whole provides sufficient time to consider a rescue plan
• Even where a company has not ultimately been saved the policy has been successful and providing the opportunity to consider advice on a possible rescue
• The costs of a Moratorium appear to be reasonable and may reduce with wider experience of the measure
• The measure is currently seen as being suitable for SMEs: however, the eligibility criteria could be amended to encourage larger companies to use the measure
• The alteration of pre-Moratorium creditor priority in a subsequent formal insolvency creates several problems and is a major reason why some practitioners are not using the measure
• As part of the priority issue, uncertainty around the meaning of “financial services” in the priority of creditor claims is a further reason for some practitioners to avoid using the measure
• The priority provided to banks in a subsequent insolvency, who continue to support a company during the Moratorium, is consistent with the policy of encouraging rescue
• There is an argument in favour of extending the category of those qualified to act as Monitors beyond IPs
• Although the issuance of further guidance may be helpful, Monitors with experience of Moratoriums have not found the process to be burdensome

4.3.1. To what extent have the policy objectives been achieved?

Data

The Moratorium has been welcomed by those interviewees who have made use of it. Those who have experience of the measure found it to be effective in providing a breathing space for companies to consider a rescue as a going concern.

Although the general opinion expressed was that the duration of the Moratorium (20 business days) is sufficient to provide the necessary breathing space there was also some concern at the consequent haste with which certain decisions would have to be made in order to stay within the timeframe (even with an extension) and often without sufficient information at that stage.

There is a general assumption that the Moratorium is not intended to be used by larger companies.

Interpretation of the data

The policy decision to base the terms of the stay on actions under the Moratorium on the familiar provisions of the administration moratorium has allowed IPs to feel comfortable that the stay on actions is effective and readily understood.

Perhaps because the Moratorium replaced the repealed CVA-specific Sch A1 of the Act moratorium which was limited explicitly to small companies (as defined by s 382 of the Companies Act 2006) there may be some residual feeling amongst practitioners that the new Moratorium is only intended to be used by SMEs. The limitation on eligibility to enter a Moratorium found in Sch ZA1, para 13 excludes (generally) a company which is a party to a capital market arrangement where the company has incurred a debt of at least £10m. This provision excludes many large companies, mid-market companies and larger SMEs from using the Moratorium.

4.3.2. Did the benefits of the measures outweigh the costs?

Data

If a company is trying to avoid creditor action and turn its business around, it was observed that at least in the SME market, the costs of a Monitor might be better used in achieving that goal rather than adding an additional overhead.

The average costs of producing an eligibility report and the required legal documents (and the filing thereof) to enter a moratorium are estimated to be approximately £15,000.

The costs of a Monitor are estimated to range from £1,000 - £3,000 per day (£20,000 to £60,000 per Moratorium) depending upon the complexity of operation.

Interpretation of the data

Although the costs of any insolvency or restructuring procedure are a perennial concern for companies and their stakeholders, the suggested fees likely to be incurred in a typical Moratorium do not seem to be out of kilter with fees for other procedures. The likely cost of monitoring a Moratorium is linked to a daily cost. This will clearly increase if an initial 20 business day Moratorium is extended. It is possible that the costs will decrease as IPs become more experienced in their new role as Monitor.

4.3.3. Were there any unintended consequences?

Data

• Regulatory cognisance

The insolvency practitioner regulatory bodies are aware of the possible use of the Moratorium and have asked practitioners why, for example, they have put a company through a pre-pack administration rather than use the Moratorium to effect a company rescue. The extra regulatory oversight of the IP’s decision may not have been intended.

• Strategic use of Moratorium

An example of the possible strategic use of the Moratorium to the detriment of creditors by directors was suggested. Although not based upon an actual case, it was suggested that it was conceivable that an unsecured creditor, such as a director of a company, whose debts fall within the statutory definition of “financial services” under Sch ZA2, for example, lending money to a company or guaranteeing its debts, might act to encourage the company to enter into a Moratorium. If the company subsequently enters administration or liquidation within 12 weeks of the Moratorium terminating, the unsecured creditor will have priority equal to all other financial creditors even those who are secured.

Interpretation of the data

Many IPs consider that their profession is already highly regulated and receiving queries in relation to why they have recommended one form of insolvency procedure instead of the Moratorium may be an entirely laudable attempt by the professional body to ensure that IPs are fully aware of their options when advising clients. Although this may be frustrating for an IP who is already very well-versed in all the available options, it may overall be a good thing that professional bodies are raising awareness of the CIGA measures.

The potential for the strategic or inadvertent use of the Moratorium to permit an unsecured creditor to jump up the order of priority is considered below at 4.3.4.2. Although the research team were not made aware of any instances of such strategic use, there appears nothing to prevent it [G McCormack, INSOL International Special Report. ‘Permanent Changes to the UK’s corporate restructuring and insolvency laws in the wake of Covid-19’. October 2020. p 31 – 35].

4.3.4. What worked well and less well?

4.3.4.1. What worked or is working well?

Data

Examples of the Moratorium working successfully were provided. Interestingly, the Moratorium has been seen to work well where a company is already preparing a rescue package such as a company voluntary arrangement (CVA) and needs some protection from one (or more) particularly impatient creditor.

Although the records at Companies House of Moratoriums appear inconsistently, there are a number of examples of the Moratorium leading to a successful rescue or CVA. There are also some examples of monitors terminating Moratoriums due to the failure of directors to co-operate with the result that the monitors were unable to carry out their functions properly. Some rescue attempts failed and the companies entered administration.

It was commented that, due to the flexibilities shown by HMRC during the pandemic, it is local authorities who are seen as the most aggressive creditors at present and an example was provided whereby a Moratorium was used to delay having to deal with business rates liabilities.

No Monitors who were interviewed were of the view that the burden on them as Monitors was too onerous.

Interpretation of the data

This use of the Moratorium in the context of a company already preparing a CVA mirrors the policy behind the little-used and now repealed former Sch A1 small companies CVA-specific moratorium. The new Moratorium is shown to work in this context as well as in other cases where a CVA is not planned. The Moratorium may therefore be seen as more user-friendly than its predecessor and the evidence is that it has been used in more than one scenario to rescue a company. This is entirely consistent with and supportive of its policy objective.

There were cases mentioned where a Moratorium was brought to an end by the monitor due to the lack of co-operation from a company’s directors or where a rescue attempt failed and the company subsequently entered administration. The policy behind the measure is to provide companies in such circumstances with the opportunity to consider a rescue plan. Where the rescue plan cannot be put into place, it is entirely consistent with the policy behind the measure that the Moratorium is brought to an end by the Monitor and that an administrator is subsequently appointed to take over the company’s management from its directors. Not all cases where a rescue is feasible necessarily lead to a successful rescue of the company as a going concern. Cases where the monitor has terminated the Moratorium are examples of the effective working of the statutory protection both to creditors and the monitor. Creditors may view positively the fact that a Moratorium is not allowed to continue longer than it should. The monitor may take comfort in the fact that they have an effective and swift power which may be used where directors do not provide the information the monitor needs effectively to carry out their monitoring role.

The example from practice provided where local authority pressure was held off temporarily by use of a Moratorium again shows the policy of the measure being successful.

The inconsistency of records at Companies House may be a short-term issue as the Registrar becomes more aware of the forms and documentation filed with a Moratorium. The types of inconsistency include filings labelled as commencing a Moratorium when in fact they were recording the Moratorium being brought to an end and there was no record of the Moratorium beginning.

4.3.4.2. What worked or is working less well?

Data

• Debtor friendly

There is a concern that the Moratorium moves the insolvency regime further away from being a creditor-friendly regime. Creditors who are struggling to get paid by their customers already had a number of procedural and substantive barriers restricting their powers to enforce payment. The Moratorium adds another potential hurdle to them.

• Eligibility and qualifying criteria

There is a concern that there are too many limitations and exemptions in the Insolvency Act 1986, Sch ZA1 as to which companies are eligible to apply for a Moratorium. Paragraph 13 of Sch ZA1 (where a company owes a capital market debt of at least £10m) in particular is seen as preventing many companies in the mid-market (as well as large companies) from being able to apply for a Moratorium.

Even if a company is eligible to make use of the Moratorium it would still have to satisfy certain qualifying criteria (e.g. the ability to pay Moratorium debts and a declaration regarding the likelihood of rescue). The opinion was expressed that it seems that the Moratorium required “a very unique set of circumstances” to be able to be used by a company: the concern being that not many companies would be able to meet both the eligibility and qualifying criteria. An opinion expressed was that the restrictions and limitations made the Moratorium a “white elephant” and that it might not be used very often due to the applicable criteria.

• Priority of debts in subsequent procedure

Real concerns were expressed that it would be rare to advise a company to enter into a Moratorium for a number of reasons. First, building upon the concern explained above at 4.3.3, the alteration of priorities in any subsequent administration or liquidation, if the rescue plan is not successful, is not simple and does alter the priority of pre-Moratorium debt. This may have the effect of a subsequent administrator or liquidator not being paid their own fees and expenses. One example given was the situation where a company’s directors may not have drawn any salary for a year prior to entering the Moratorium. If the rescue plan is unsuccessful and the company enters liquidation, the directors’ unpaid salary (whether owing for a period before or after the Moratorium), instead of being an unsecured debt with a small amount preferential under Sch 6, is provided with super priority under s 174A(3)(iv) and so gets paid out ahead of the liquidator’s fees and expenses. Exiting the Moratorium is therefore something which can lead to potentially absurd results. In this example, a compulsory liquidation would appear to be the only realistic option as an exit as no private sector insolvency practitioner is likely to agree to take on the office. It is therefore the case that a Moratorium may not be advisable unless rescue is extremely likely. If a subsequent administration or liquidation is reasonably likely the altered change in creditor priorities will act as a significant disincentive to use the Moratorium.

Secondly, there is uncertainty about the meaning of “financial services” as it is applied in the distribution of a subsequent procedure. The example given was of the common situation where goods are held by a company on hire purchase or conditional leasing terms. If the owner terminates the contract due to breach by the company and threatens to repossess, the company may enter a Moratorium which does prevent the repossession whilst a rescue plan is considered. The debt owed will not be a pre-moratorium debt for which there is a payment holiday if, under s A18(3)(f) the debt is seen as one which arises “under a contract or other instrument involving financial services”. The detailed meaning of “financial services” for these purposes is found in Sch ZA2 but it is not clear whether, for example, liability for the hire purchase goods comes within the undefined phrase “financial leasing” in para 2(a)(ii) or some other provision.

Thirdly, it is clear from the discussion in Re Corbin & King Holding Ltd [[2022] EWHC 340 (Ch) at [15]] that entering a Moratorium would not usually be feasible for a company whose bank did not support the decision. The bank debt will not usually fall within the category of debts in relation to which the company has a payment holiday during the Moratorium as it will fall within the exception for “financial services”. The picture is not entirely straightforward as where a debt is owed to a bank it is common under the terms of the lending to allow the bank to accelerate payment of the total debt. Although such accelerated debt will not, in itself, have super priority in any subsequent insolvency procedure (s 174(3) and (4)), there is nothing in the terms of Part A1 which prevents the bank demanding payment of the whole debt during the Moratorium (or calling in a guarantee from the company as in the Corbin case). This debt will not usually be a debt which the company can pay and so the Monitor of the Moratorium will have a duty to terminate the Moratorium if the Monitor thinks the company will no longer be able to pay its Moratorium debts as they fall due (s A38(1)(d)). Sir Alastair Norris commented in the Corbin case at [14] that the “exclusion of finance debts from the ‘payment holiday’ effects of a moratorium is somewhat surprising”.

• Impact on international trade

A specific example of how the Moratorium’s alteration of priorities may impact upon international trade was provided by the British International Freight Association (BIFA). The terms upon which most freight is shipped internationally assert a period of credit to be provided by the freight forwarder to its clients. BIFA’s Standard Trading Conditions (BIFA STCs) allow a BIFA member to exercise a lien over the goods being shipped whenever monies are due and owing.

The lien may be exercised effectively prior to a client entering the Moratorium but it cannot be exercised once the company is subject to a Moratorium (under s A21 of the Insolvency Act 1986). This mirrors the situation if a client enters administration. The problem faced by BIFA members is that if a client enters a Moratorium, the lien cannot be exercised and the BIFA member may be called upon to deliver the goods to the client. The historic debt owed by the client prior to entering the Moratorium is likely to be a pre-Moratorium debt under ss A18 and A53 for which the client has a payment holiday. If the client is not rescued as a going concern, not only does the historic debt have no priority in a subsequent liquidation or administration, but the situation is worse because other pre-Moratorium debts are granted a form of super-priority (under s 174A and para 64A of Sch B1) if the liquidation or administration commence within 12 weeks of the Moratorium terminating.

• Reputational risk

There was also a concern expressed in relation to possible reputational risk to the IP should the company not be successfully rescued.

Interpretation of the data

Although the data suggests that the insolvency regime becoming more debtor-friendly is a concern for some stakeholders, it is a clear policy objective of the measure that companies should be provided with more options to allow for a rescue package to be considered. The whole purpose of a Moratorium is to block temporarily, creditors with the addition of one further hurdle for them to get over.

Although the exclusions from eligibility in Sch ZA1 seem generally acceptable, the limitation in para 13 excluding companies with capital market debts of least £10m does close off the use of the Moratorium by some companies who might find it useful. The policy objective to allow entry for struggling companies that meet the eligibility criteria appears to be met but it might open up the Moratorium to other, currently non-eligible struggling companies if this capital markets limitation was revisited.

The suggestion that struggling companies would not often be able to satisfy the qualifying criteria of being able to pay Moratorium debts and make a declaration regarding the likelihood of rescue was not made by a practitioner with experience of the Moratorium process. Those who had used it did not find this an issue. The policy objective of providing a “breathing space” to allow companies to consider its best option appears to be entirely feasible as it has been shown to have worked as intended.

The alteration of the relative priority of creditors in a formal insolvency subsequent to a Moratorium is unique in the Insolvency Act 1986. There is a strong argument, if use of the Moratorium is to be encouraged, that pre-Moratorium priority of debts should be retained in any post-Moratorium liquidation or administration. This would provide a more predictable level playing field for creditors who would not gain by trying to manipulate a failed rescue attempt during the Moratorium.

The separate point about the exclusion of financial debts from the effect of the Moratorium is further explained by Sir Alastair Norris in the Corbin case at [16]. The Parliamentary debates show that the purpose of this provision was to encourage continued lending to struggling companies. Had such debts been included within the Moratorium’s payment holiday the lenders might be disincentivised from doing so. Companies in a Moratorium will need the support of their lenders if a rescue is to be achieved and the provision excluding financial debts from the payment holiday is designed to encourage further financial support. This provision is therefore consistent with the stated policy of the measure.

Although the policy objective is clear in that it encourages, for example, further bank lending to a struggling company in Moratorium, it would appear helpful to have clarity around what types of debts fall within the definition of “financial contracts”. The uncertainty around hire purchase, conditional leasing and credit provided under BIFA STCs would benefit from clarification. It may be that the position in administration could be adopted which would recognise pre-Moratorium priorities of debts and only provide a form of super priority to new money provided during the Moratorium.

Reputational risk was anecdotally considered to be a factor why the repealed Sch A1 small companies CVA moratorium was not more popular. It is possible that this concern is linked to historic worries about that different form of moratorium. There was no suggestion from the IPs who had acted as monitors of a Moratorium that they had concerns about reputational risk.

4.3.5. Could the measures be improved upon?

Data

• Duration

It was suggested that the subsequent period after an initial extension should be 10 business days longer.

• Monitor qualification and role

There was a divergence of opinion as to whether only an IP should be able to act as a Monitor: opening up the role of Monitor to others (such as accredited turnaround professionals) may lead to reduced costs and be more consistent with company rescue. However, some secured creditors consider that Monitor appointment should be limited to IPs.

There is some uncertainty about the nature of the new Monitor role created by the Moratorium. This new role for the IP differs from that which is traditionally understood by creditors (e.g. administrator or CVA supervisor). The uncertainty relates to the Monitor’s level of engagement with the operation of the business and possible rescue plan. This was provided as a possible reason why the measure has not been widely used. It was suggested that more guidance be provided to address this issue.

• Company eligibility

In order to open up the Moratorium to companies who are not SMEs the eligibility criteria for which companies qualify might be amended. It seems at the top of the market, a standstill agreement can usually be agreed upon relatively easily and so the use of the Moratorium at the top of the market is likely to be limited even if available.

• Simplified process and guidance

A simple guide to how the Moratorium operates would be gratefully received by stakeholders. In order to achieve this, the process itself needs to be simpler and less complex.

• Outlaw abusive informal moratoriums

The use of the Moratorium might be encouraged if the power to file multiple notices of intention to appoint an administrator (which creates an interim moratorium under Sch B1, para 44) was restricted and such restrictions policed.

Interpretation of the data

The comment that an extension of a Moratorium could be increased by 10 days was made by an interviewee with experience of using the Moratorium. No reasons were given to support the suggestion. It seems that the comment may be based upon the circumstances of a specific case. There does not appear to be any clear reason why all extensions of a further 20 business days should instead be for a further 30 business days. The suggestion may be linked to the 2018 consultation which had considered a 28 day moratorium with a possible 28 day extension [A Review of the Corporate Insolvency Framework: Consultation outcome Available at: A Review of the Corporate Insolvency Framework - GOV.UK (www.gov.uk) at 5.49].

Banks, as secured creditors, are used to having a say in which IP is appointed to a company. There is a risk to banks of hostile appointments with the appointment of a Monitor whose appointment has not been approved by the bank. Partly for this reason, banks would prefer to limit appointment to insolvency practitioners. The Corbin case shows that even though only an IP can be appointed, a hostile appointment is still possible.

The question as to who should be able to act as Monitor is linked to the issue of what the Monitor is in place to achieve. If the Monitor is there merely to monitor that the company can continue to pay its Moratorium debts and to be of the view that rescue remains likely, the role seems capable of being filled by either an IP or other relevant professional such as a professionally qualified turnaround specialist.

The potential problem with appointing a turnaround specialist to a distressed company is that if they are in the company to effect a rescue, their actions as turnaround specialist may be seen to be in conflict with them also acting in the role of Monitor. If they are being paid to rescue the company as a going concern (as turnaround specialist), is it compatible with their acting as Monitor at the same time where they need to consider objectively whether rescue remains likely? The same query applies to an IP who is advising the company on a possible rescue. The guidance offered by, for example, Dear IP Issue 135 from August 2021, leaves the matter up to the Monitor to decide whether their advice as a restructuring specialist impacts upon their objectivity as Monitor.

Sequential insolvency appointments do give rise to a risk of conflict of interests. The 2016 and 2018 consultations [A Review of the Corporate Insolvency Framework: Consultation outcome Available at: A Review of the Corporate Insolvency Framework - GOV.UK (www.gov.uk)] which informed the introduction of the CIGA measures did suggest that although a Monitor could subsequently act as a supervisor of a CVA, as this was consistent with rescue as a going concern, they should not be able to act as administrator or liquidator. This suggested restriction was not included in the final version of the Moratorium but does suggest that there is a potential for a conflict where a Monitor continues in office after the Moratorium has come to an end.

If the role of Monitor was explained in more detail it would perhaps make it clearer who should be qualified to carry out the role and also allow professional bodies to provide clear examples of where sequential appointments may give rise to a risk to objectivity. Extending the role of Monitors to non-IPs might reduce the costs of a Moratorium.

Possible amendments to the rules on company eligibility are considered above at 4.3.4.2.

There is some very helpful official guidance provided online by the Insolvency Service in the form of Guidance for Monitors [Guidance for monitors published 26 June 2020. Available at: https://www.gov.uk/government/publications/insolvency-act-1986-part-a1-moratorium-guidance-for-monitors/test-doc], generally in CIGA’s Explanatory Notes [CIGA Explanatory Notes. Available at: https://publications.parliament.uk/pa/bills/cbill/58-01/0128/en/20128en.pdf] and the House of Commons briefing paper on CIGA [CIGA House of Commons Briefing Papers. Available at: https://commonslibrary.parliament.uk/research-briefings/cbp-8971/]. The legislation on Moratoriums is reasonably detailed and it is possible that the replacement of the initial temporary rules in Sch 4 of CIGA 2020 by new (and slightly differently worded) permanent rules now found in Part 1A of the Insolvency (England and Wales) Rules [(SI 2016/1024) or the Scottish equivalent], may have caused some difficulty in keeping track of what is the current law. This issue is likely to be less of a concern as practice becomes more developed and IPs become more conversant with the new Rules. IPs with experience of using the Moratorium did not feel the process was particularly burdensome or overly complex. Publication of updated guidance in a single place may be of use of some IPs.

There is a risk that some IPs may continue to use the administration provisions under paras 28(2) and 44(4) of Sch B1 of the Act to create a 10-day moratorium (or a succession of such moratoriums) where directors file a notice of intention to appoint an administrator. Although the Court of Appeal has made it clear that it is an abuse of process to make such filings in the absence of a fixed intention to appoint an administrator [JCAM Commercial Real Estate Property XV Ltd v Davis Haulage Ltd [2017] EWCA Civ 267], the practice may not have disappeared. If this abusive practice was restricted effectively, it is likely that companies would begin to use the more transparent Moratorium process.

4.3.6. How did external factors influence the delivery and functioning of interventions?

Data

Due to the widespread protections and support provided by the Government to assist businesses during the pandemic, the real utility of the Moratorium remains largely an untapped resource. That apart, there were no external factors which were identified by any interviewees which have impacted the operation of the Moratorium.

Interpretation of the data

There is no suggestion that external factors, other than the widespread protections and support provided by the Government to assist businesses during the pandemic, have influenced the functioning of Moratoriums.

4.3.7. What impact has the measure had on employees?

Data

Although the Moratorium is capable of being used strategically where there are shareholder disputes or shareholder disputes with creditors, it has been used successfully to keep operating companies trading as debtors in possession pending a rescue plan. It has been used to safeguard jobs in such circumstances where otherwise those jobs might have been in jeopardy if, for example, the company was forced into administration.

Interpretation of the data

The data suggests that when the Moratorium is used it has been effective to save companies and, in the process, employment has been safeguarded. The emphasis on rescuing companies as a going concern is likely to have a positive impact on jobs being saved. One of the issues with a business being bought out of administration or liquidation, is that the business itself may not be viable, may not take steps to improve its business model and may struggle to avoid future financial problems. The nature of the Moratorium allows for oversight by a Monitor as the directors of the company attempt to put in place a plan to rescue and turn around the company itself. The Moratorium is therefore clearly capable of having a genuine impact on saving companies and jobs.

4.4. Suspension of ipso facto (termination) clauses

Key findings

• Due to other Government interventions during the pandemic which effectively allowed many companies to avoid entering a formal insolvency procedure, there is currently a lack of evidence as to the practical operation of the ipso facto measure
• The measure is seen as satisfying the policy objective of preventing companies in insolvency procedures from being held hostage by suppliers
• Although previously IPs would negotiate with suppliers when the need arose, the measure has made communication with suppliers a Day One matter
• The certainty that the measure brings to relations with suppliers is likely to lead to savings in time and in fees
• There is no evidence yet as to how the hardship defence may work in practice
• Although the measure may not be decisive in many cases it is seen as a very helpful power in helping to ensure a business can be turned around and jobs saved
• The priority of payment of suppliers under the measure appears likely to vary depending upon which insolvency procedure the company has entered
• Trade credit insurance will not cover the continuing supply under the measure as such insurance ceases when a company enters a formal insolvency procedure. Therefore, it is unlikely that suppliers would utilise such a product.

4.4.1. To what extent have the policy objectives been achieved?

Data

Section 233B has had the effect of ensuring office holders consider contacting suppliers on Day One when appointed, whereas before they may have waited for there to be an issue with continued supply. The provision encourages early certainty of supply and straightforward dealing with supplier.

The measure is not seen as a decisive new power but it is seen as very helpful and likely to save time and costs.

Office holders have always been pragmatic in their negotiations with suppliers and so, in many cases, especially with SMEs, s 233B may not be needed. It has been broadly welcomed as it does make continued supply a more straightforward issue most of the time.

Although seen as very relevant to the SME market, it is seen as less likely to be needed or relied upon often at the top end of the restructuring market. Large companies which undergo a restructuring will usually find it relatively straightforward to negotiate and secure continued supplies during the restructuring process without the need to insist on its legal rights under s 233B.

Interpretation of the data

The measure is seen as achieving its policy objective of preventing companies subject to a formal insolvency procedure from being held hostage by suppliers. It is clear that in the past, IPs very often managed to negotiate a result similar to the effect of the measure. It is also clear that when supply issues did arise in such cases, the IP needed to enter into a negotiation with suppliers to ensure continued supply. This might have been on the same terms as before or there may have been some alteration of the terms of supply depending upon the facts. The negotiation would be conducted when the issue arose for resolution during the insolvency process and so there was a degree of uncertainty about the result. The measure has two related positive effects. Firstly, IPs are likely to deal with suppliers very early on during an appointment. They refer to the need for a continued supply and to the measure. This creates certainty on supply issues early in the process. Second, IPs no longer need to engage in any negotiations later in the process as the matter has been settled early on. This has the likely consequence of less IP time spent on the matter and so as well as creating early certainty of supply is also likely to have a positive effect on the time costs of the IP.

4.4.2. Did the benefits of the measures outweigh the costs?

Data

As explained above in the Background to the CIGA measures, the number of insolvencies during the pandemic has been substantially lower than before lockdown. As the Government measures put in place temporarily to assist businesses draw to a conclusion at the end of March 2022, it is likely that the full impact of the measure will only become clear as the insolvency and restructuring market begins to return to normal. The return to normality, both in terms of numbers of insolvencies and also in terms of normal restructuring work without temporary Government restrictions.

There is no indication yet as to any costs associated with the measure or how many businesses are being saved due to the measure. There is no evidence yet of the operation or cost of the hardship defence available to a supplier.

Interpretation of the data

The CIGA Impact Assessment [Corporate Governance and Insolvency Bill Impact Assessment: (parliament.uk)] assessed the likely cost of the measure to suppliers in terms of the cost of purchasing trade credit insurance. There appears to be an assumption in that assessment that trade credit insurance would continue to cover supplies to companies who are in a formal insolvency process. As the trade credit insurance market exists at this point, it is the research team’s understanding that trade credit insurance cover will terminate at the point a company enters a formal insolvency process. The trade credit insurance policy will generally cover supplies not paid for up to the date of formal insolvency. Any supplier who has to continue to supply to the insolvent company subsequently will therefore not have the benefit of insurance cover. Therefore, at this stage, it appears that suppliers could not purchase trade credit insurance as a response to the policy. It may be that a new trade insurance product will cover supplies to an insolvent company under s 233B but there is no indication that the market is considering such a policy.

Although the supplier cannot require payment of pre-insolvency debts as a condition of continued supply there appears nothing to stop them insisting upon full payment for the continued supply of goods and services during the company’s insolvency period.

Partly due to the s 15 CIGA temporary exemption for small suppliers from the measure (which came to an end on 30 June 2021) the hardship test has yet to be tested in the courts.

4.4.3. Were there any unintended consequences?

Data

One unintended consequence of the provision identified is where a contract is drafted in some detail and provides for termination to be triggered without any need for insolvency. In such cases, there is a risk that some suppliers may be advised to terminate their supply early, the effect of which clearly does not encourage rescue. Prior to CIGA such suppliers might have waited longer prior to acting.

A concern was expressed that a supplier may lose out if the continued supply under s233B is made without the office holder’s knowledge. This might impact upon eventual rescue plans and future distributions by the office holder.

It is too early to assess how the hardship provision may protect some suppliers but one concern raised is that some suppliers may already have gone unpaid for several months prior to the company entering an insolvency process and then be required to continue that supply further under s 233B. There is a concern that payment even for the continuation of supply is not guaranteed under s 233B.

Interpretation of the data

The data suggests that there is, as yet, little practical experience of s 233B in practice. Once its operation becomes clearer to IPs, lawyers and businesses, there are likely to be attempts by suppliers to manoeuvre around the measure to avoid continuing supply.

There is a genuine concern that suppliers who do continue to supply to insolvent businesses are not guaranteed payment for that continued supply. This risk is not likely to be high when the company is in administration as the continued supply will have the benefit of super priority under Sch B1, para 99 of the Act. The position is less clear where there is no office holder controlling the company. In such debtor-in-possession proceedings such as RPs, CVAs and Moratoriums, the supplier will need to negotiate payment terms which reduce this risk. If there is a concern that the cost of the continued supply will not be met, the supplier may need to apply to the court claiming hardship. It seems likely that if non-payment is a genuine concern and if such non-payment would impact significantly on the supplier, the supplier should be able to claim hardship. This risk applies equally to small and large suppliers.

4.4.4. What worked well and less well?

Data

For the reasons stated above in relation to Government support during the pandemic, it appears too early to assess the impact on practice. There were concerns expressed about how enforceable s 233B would be if a supplier chose not to act in accordance with the law. It is unlikely that an office holder would take legal action against a small supplier. Equally, if a major supplier decided not to co-operate under the terms of s 233B, an office holder would again be unlikely to sue.

Interpretation of the data

Although there appears to be little evidence yet of how insolvent companies and their suppliers are approaching the measure, there are some concerns around possible non-compliance. There is a concern that enforcement of the measure may not be straightforward. Legal action by the insolvent company to ensure continued supply may be logistically difficult for several reasons. Suppliers may decide to run the risk of non-compliance. This uneasy status quo may change if a failure to continue supply has a major effect on a proposed company rescue with large financial implications. At present, the risk to a supplier who intentionally breaches its obligations under s 233B remains unclear. If the consequences to a non-compliant supplier were made clearer, and they were significant, it is likely that they would either comply or apply to court claiming that to comply would cause them hardship.

4.4.5. Could the measures be improved upon?

Data

Suppliers are likely to be generally content to continue to supply as they are very likely to get paid. Where possible (for example, under energy supplier contracts) they will look to bring the continued supply under ss 233 (administration, CVA, administrative receivership, liquidation) and 233A (only administration and CVAs) so as to be able to demand a personal undertaking from the office holder to cover the cost of the continued supply (s 233 (2)) which they cannot do under s 233B (administration, CVA, administrative receivership, liquidation, Moratorium and RP) even though they are likely to be provided with a high priority in such cases. There is an argument to bring the provisions together for clarity and consistency. Although the protection in s 233B for the supplier is strong, it might be made stronger if a personal undertaking from an office holder could be demanded from the supplier under s 233B in a similar way as it is possible if the supply falls within s 233A.

It might be possible to clarify whether the provision of licences is included within s 233B.

Interpretation of the data

According to Sch 4ZZA para 1, if a supply is covered by s 233A, then s 233B does not apply so there should be clarity as to under which provision the continued supply is required.

Although the measure clearly has much in common with s 233A, the problem with the suggestion that a supplier should be able to demand an office holder guarantee for supply during the insolvency does not easily translate into the debtor-in-possession procedures. Although s 233A specifically includes a supervisor of a CVA, such supervisors invariably hold funds for the creditors which could be used to ensure payment. There is no equivalent in RPs and Moratoriums. Although a Monitor acts in relation to a Moratorium they do not hold company assets and so would have no property available with which to ensure payment is made. In a Moratorium the continued supply would benefit from super priority in any subsequent administration or liquidation as discussed above at 4.3.4.2. It would seem reasonable to leave the measure as it is which leaves the supplier with some flexibility in how it negotiates assured payment for future supplies.

The issue of licences has been a matter which the courts have considered in the context of administration. The Government’s 2018 response [A Review of the Corporate Insolvency Framework: Consultation outcome Available at: A Review of the Corporate Insolvency Framework - GOV.UK (www.gov.uk)] to the consultations on the provisions which became CIGA concludes, at para 5.104, that contractual licences are within the measure, but public regulatory licences are not.

4.4.6. How did external factors influence the delivery and functioning of interventions?

Data

There remains some uncertainty as to the impact of the measure on trade credit insurance. Trade credit insurance covers suppliers against the risk of their customers being unable to pay their debts (at all or on time). Suppliers pay an insurance premium to have the benefit of this guarantee.

Experts in trade credit insurance from the Association of British Insurers are not yet clear how s 233B will affect practice. There is some uncertainty as to whether the obligation to continue to provide trade credit insurance itself falls within the exemptions to s 233B listed under Sch 4ZZA, para 3.

It has been stated that it is usual practice for trade credit insurance cover to cease if a customer enters a formal insolvency procedure. In such circumstances, a supplier’s insurance cover will therefore cease even if the insolvent customer requires a continued supply. There is no indication that the terms of insurance policies will be amended to allow cover for such continued supply.

Interpretation of the data

It seems likely that the provision of trade credit insurance does fall within the Sch 4ZZA, para 3 general exclusion for suppliers who carry on the regulated activity of effecting contracts of insurance.

Although it may become possible to insure continued supply under s 233B, there is no suggestion that the market is currently considering this type of policy. Due to the priority of payment such continued supply is likely to have in an insolvency there may be little need for such a new product.

4.4.7. What impact has the measure had on employees?

Data

It is too early to assess whether the measure has been used to save jobs directly but the general view is that it is a useful tool for office holders to use when continued supply is crucial to a rescue plan.

Interpretation of the data

The measure is seen as a useful addition to the powers available to office holders (and companies where they are debtors-in-possession). As the economy comes out of the unusual pandemic period of trading, its value is likely to become clearer. Continued supply is often crucial to a company rescue and the time and money saved by those restructuring companies due to the measure are certain to assist in saving companies and saving the jobs of their employees. The measure does not impact directly on employees but wherever companies are saved, it is usual that jobs are safeguarded too. There is therefore a clear theoretical link between the utility of the measure and employee retention.

5. International perspectives

Data

During the interviews various comparisons were made to similar measures introduced or in operation in other jurisdictions. The jurisdictions specifically mentioned during the interviews were: the Netherlands, Germany, the United States of America and Singapore.

Some comparisons were seen as particularly relevant considering the EU Restructuring Directive [Directive (EU) 2019/1023 of the European Parliament and of the Council of 20 June 2019 on preventive restructuring frameworks, on discharge of debt and disqualifications, and on measures to increase the efficiency of procedures concerning restructuring, insolvency and discharge of debt, and amending Directive (EU) 2017/1132 (Directive on restructuring and insolvency). Available at: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex:32019L1023] (such as the Netherlands and Germany) which also informed CIGA, while others mentioned, reflect what is regarded as best practice in a competitive restructuring market (such as the United States and Singapore).

In commenting on the consent threshold for the RP and the need for two court hearings, interviewees expressed interest in the way the other jurisdictions dealt with their restructuring measures. The RP currently requires a three-quarters voting consent threshold and requires that the RP be considered at a convening and sanctioning hearing.

The popular pre-insolvency proceedings of the Dutch the Wet homologatie onderhands akkoord (WHOA) were lauded for providing a cross-class cramdown at a consent threshold of two-thirds (instead of three-quarters), without a numerosity requirement whilst having only one hearing, the sanctioning hearing (instead of a convening and a sanctioning hearing). The German Insolvenzplan was mentioned for providing a debtor-in-possession style restructuring procedure whilst requiring a simple majority as a consent threshold (instead of three-quarters).

As is well known the US Chapter 11 Bankruptcy Code has influenced many of the recent developments worldwide, especially its power to cram down a dissenting class of creditors. A Chapter 11 petition automatically stays all creditors against the company (subject to some exceptions). The automatic stay is stated to extend worldwide. Classes of creditors approve a Chapter 11 reorganization plan by a two-thirds majority in value and more than one-half in number of class members.

Singapore’s unique new ‘super-charged’ Scheme, introduced by s 64 of the Insolvency, Restructuring and Dissolution Act 2018 takes inspiration from the US Chapter 11. The Singapore measure was mentioned as it combines a RP with a court approved 30-day moratorium. The formalities and consent threshold of this procedure are similar to that of the RP and Company Moratorium but provide both tools. A 75% in value majority is needed for the Scheme to be approved in addition to a majority in number in favour. The Singapore moratorium also grants extra territorial effect which the Company Moratorium does not.

Apart from making comparisons to the working of similar measures in these jurisdictions, some interviewees mentioned the need for the UK to stay competitive as an international restructuring hub.

Interpretation of the data

The opinion was expressed that if the UK would like to maintain its competitiveness in the global restructuring market the following suggestions ought to be considered:

• limiting the role of the court in restructuring procedures;
• reducing the voting threshold for approval of RPs;
• providing for restructuring measures with extra territorial effect.

As discussed in 4.2.5, limiting the role of the court in the RP might be a way to reduce the burden on business. Furthermore, there might be appropriate circumstances when two full hearings would be superfluous.

In considering a reduction in the consent threshold, the role of Part 26 Schemes as the bedrock for RPs should be kept in mind. Part 26 Schemes requires a creditor consent threshold of three-quarters in value (and a majority in number) and the RP’s consent threshold (without the need for numerosity) is therefore consistent with that of the Part 26 Scheme. A change in the consent threshold for RPs would constitute a major shift.

Providing the measures with extra territorial effect would reduce costs as well as create certainty. Moreover, it would appear to be more in line with what is regarded as best practice [The European Bank for Reconstruction and Development (EBRD)’s Core Principles of an effective Insolvency System in Principle 15 – “Given the transnational nature of modern businesses, an effective insolvency system should facilitate the smooth conduct and resolution of cross-border insolvencies”].

6. Conclusion

Stage One data suggests that the CIGA measures have been broadly welcomed by all stakeholders. Each of the measures broadly satisfies its policy objectives.

IPs and lawyers appear to have readily embraced the RP as the statutory provisions which govern the RP are based largely upon the existing jurisprudence and procedures which are well known in the context of Part 26 Schemes. Although there is support for the decision to use Part 26 Schemes as a basic blueprint for RPs there is a view that an opportunity was lost to draft something more modern which may be compared more favourably with international developments.

The Moratorium is being used successfully. The terms of the stay on creditor actions is based upon the stay found in administration and so practitioners and creditors are familiar with its effects. However, there is concern that the alteration of creditor priorities when a company enters a subsequent insolvency procedure may lead to a lack of certainty. This has caused unease and there is evidence that the measure is not being used in some cases because of it.

It is probably too early to assess the effect of the ipso facto restriction but so far it is generally seen as a useful power which, when needed, will make a real difference when trying to rescue companies and save jobs.

Informed by the results of Stage One, during Stage Two the research team will prepare an online survey which it will distribute to all practising IPs. The online survey is designed to discover quantitative data in answer to the research questions. Also, during Stage Two, the research team will continue to interview IPs, lawyers and interested trade and other bodies. As the economy emerges from Government protections, trading conditions will return to a new normal where the use of the CIGA measures are likely to become clearer.

Annex A

Logic Models

Measure	Context	Inputs	Outputs	Outcomes	Impacts
Company Moratorium	Problem: Action taken by creditors can cause viable companies to fail unnecessarily because they do not have any time to look at rescue options. The policy aim is to give struggling companies a short (though extendable) period of protection during which they can seek advice, negotiate with creditors and agree plans to enable the company to be rescued as a going concern. This will give companies a better chance of survival	Primary legislation will be enacted to create a company Moratorium	Delivery of a Company Moratorium for 20 business days (or longer with an extension)	Companies use the company moratorium. This will protect companies, thereby facilitating advice, negotiation and appropriate plans for rescue.	Enhanced business preservation as a going concern of distressed companies to be completed at a lower cost and faster time. Increased job preservation meaning a reduction in social costs. Improved returns to unsecured creditors helping the business community invest more.

Suspension of Ipso facto (termination) clauses

Problem and policy objective: During insolvency the debtor company can be held hostage by key suppliers that ask for ransom payments or terminate supply. The policy will prohibit such clauses and ransom payments. In doing so this will create a valuable tool to help companies restructure and provide better returns.

The measure will use primary legislation to change the law to prohibit termination clauses.

Termination clauses that engage on insolvency and ransom payments will be prohibited in insolvency. This will remove a hindrance to business rescue.

The prohibition of termination clauses and ransom payments will support ongoing company rescue and enable more to benefit from rescue. Suppliers now unable to rely on termination clauses which may incur additional costs.

Fairer distribution of available funds to body of creditors. Enhanced business preservation and restructuring. Increased job preservation, reduction in social costs. Improved returns to secured creditors resulting in greater business lending and lower risk premiums being charged on loans. Improved returns to unsecured creditors helping the business community invest more.

Restructuring Plan

Policy aim is to address the scenario where a relatively junior secured creditor can block a company rescue in a scheme of arrangement or CVA, despite the proposals being supported by other classes of creditors. To address this a new restructuring procedure will be created which will enable the court sanctioned binding of creditors into a plan where members of a dissenting class of creditors would receive no less than they would in the next best scenario.

Primary legislation will be enacted to create a new restructuring plan.

The measure will create a new restructuring plan. To initiate the plan must be proposed by a company in financial difficulties or its creditors. Many of these plans will replace existing schemes of arrangement.

Improved return from facilitating business restructuring. This will effectively address the situation where a junior secured creditor blocks a company rescue.

This will facilitate company rescue and boost returns to creditors and support job preservation. Increased job preservation, reduction in social costs. Improved returns to unsecured creditors helping the business community invest more. Improved returns to secured creditors resulting in greater business lending.

Annex B

Corporate Insolvency and Governance Act 2020

Post-Implementation Review

Topic Guide

Introduction

The Corporate Insolvency and Governance Act 2020 (CIGA) introduced three permanent measures aimed to relieve the burden on businesses both during and after the Covid-19 pandemic:

• Company Moratorium

• Suspension of Ipso Facto (Termination) clauses

• Restructuring Plan

The Government made a commitment to review the three permanent measures no longer than three years after they came into force. A mixed methods approach to this review has been adopted, which includes monitoring data but also quantitative and qualitative primary data collection. The University of Wolverhampton has been commissioned to carry out, first, at the end of 2021 and the beginning of 2022, the supporting qualitative research via online in-depth interviews of different stakeholders and, secondly, later in 2022, to conduct quantitative research via an online survey of insolvency practitioners.

The online interviews are semi-structured and designed to last for between 30 - 60 minutes. Those selected for interview have been purposively selected. A sub-strand of purposive sampling is expert sampling. Interviewees have been asked to participate due to their high degree of knowledge in relation to one or more of the CIGA measures.

The interviews will be conducted by either Professor Peter Walton or Dr Lezelle Jacobs. All answers provided will be treated confidentially and the anonymity of all interviewees will be ensured unless they wish to waive their anonymity. All the recordings of interviews will be stored confidentially by the University of Wolverhampton and transcripts anonymised prior to any sharing with the Insolvency Service. (University of Wolverhampton Standard Consent form attached)

During the interview, responses will be sought in relation to the following questions regarding the three permanent measures introduced:

• Have the measures achieved what they set out to achieve by way of policy objectives?
• Were there any unintended consequences?
• What worked well and less well?
• Could the measures be improved upon?
• How did external factors influence the delivery and functions of the interventions?
• The impact of the measures on employees?

It might be useful to consider your responses in relation to these themes in preparation for the interview.