Monitoring the moratorium: assessing the demanding role of monitors

This paper examines the role of the monitor in commencing and supporting the integrity of the company moratorium process. The standalone moratorium was introduced by the Corporate Insolvency and Governance Act 2020 as part of the permanent measures seeking to strengthen the UK’s rescue and restructuring regime. Entry into the moratorium requires an insolvency practitioner consenting to act as the monitor for the proposed moratorium. The process of obtaining, continuing, and terminating a moratorium is reliant on the co-operation of the monitor. Following the initial appointment, the monitor’s role is to ensure that the strict eligibility requirements for the moratorium are met and to assess the likelihood of the company being rescued as a going concern. Evidently, the demands placed on monitors are extensive and they are required to fulfil their monitoring obligations within the short timescales available. To date, there remains substantial uncertainties as to the role, reputational risks, and potential scope of liabilities and criminal penalties for monitors. Furthermore, the professional risks of acting as a monitor appear to be more significant compared to the risks of acting as an administrator. Such factors have impacted on the willingness of some insolvency practitioners from acting as monitors. These ongoing issues may provide a possible explanation as to why the standalone moratorium has seldom been used since its introduction. Consequently, this paper will consider the onerous burdens placed on monitors in fulfilling their functions of assessing the prospects of a successful company rescue.