On 26 July 2010, the Insolvency Service issued proposals for a new type of short-term restructuring moratorium. The moratorium would be available through a court-based process to companies with a viable business and the general support of creditors. The proposed moratorium could have the potential to encourage more companies to view the UK as an attractive jurisdiction for restructuring.
What are the proposals?
The main features are:
Financial guarantees often contain non-competition clauses. This is mainly to:
- increase the financier’s recoveries from its principal debtor, by stopping the guarantor from draining money from the principal debtor; and
- prevent the guarantor from obstructing a restructuring of the principal debtor’s liabilities.
A recent case suggests these clauses should expressly exclude the “rule in Cherry v. Boultbee”. Zoë Thirlwell and Alexander Hewitt explain.
Counter-indemnity rights
Financial guarantees often contain non-competition clauses. This is mainly to:
- increase the financier’s recoveries from its principal debtor, by stopping the guarantor from draining money from the principal debtor; and
- prevent the guarantor from obstructing a restructuring of the principal debtor’s liabilities.
A recent case suggests these clauses should expressly exclude the “rule in Cherry v. Boultbee”. Zoë Thirlwell and Alexander Hewitt explain.
Counter-indemnity rights