The Part A1 Moratorium at Six Years: Why Britain's Standalone Pre-Insolvency Tool Has Logged Fewer Than Eighty Filings

On 26 June 2020 the Corporate Insolvency and Governance Act 2020 received Royal Assent, and with it a new Part A1 was bolted onto the Insolvency Act 1986. The moratorium it created was supposed to be the centrepiece of a modernised UK rescue toolkit: a court-light, debtor-in-possession breathing space that any solvent-with-time company could claim, free of the administrator-in-charge baggage of Schedule B1. Six years on, the Insolvency Service's quarterly statistics show fewer than eighty filings since inception. The Part 26A restructuring plan — CIGA's other headline reform — has been used by Virgin Active, Thames Water, Cineworld and a Court of Appeal's worth of mid-market issuers. The moratorium has been used, in any given quarter, by between two and seven companies.

This post explains what the Part A1 moratorium actually does, what gets filed at Companies House when one is in force, why uptake has stalled, and what the Insolvency Service's statutory five-year review is likely to recommend.

What Part A1 actually delivers

The moratorium is a statutory payment holiday with a public-register footprint. Directors remain in office. There is no administrator and no CVA proposal. Instead a 'monitor' — necessarily a licensed insolvency practitioner — supervises the company throughout, signs the eligibility statement (section A6, IA 1986), and must form the view that the moratorium is likely to result in the rescue of the company as a going concern.

The initial period is 20 business days from filing. Directors can extend by a further 20 business days without anyone's consent (section A10), and by up to a year with creditor consent (section A11). Court-ordered extensions are available but rarely needed. The moratorium ends automatically if the monitor's view changes, if a relevant insolvency proceeding begins, or if the period lapses without extension.

The central commercial feature — and the source of the moratorium's troubles — is the payment-holiday architecture in section A18. Pre-moratorium debts are split into two categories: those with a payment holiday (trade, HMRC, rent arrears) and those without (financial-services debt under a contract or instrument involving financial services, plus wages, redundancy and goods and services supplied during the moratorium). Anything in the 'no payment holiday' bucket must continue to be paid as it falls due, or the monitor must terminate.

What lands at Companies House

A company in a Part A1 moratorium is publicly identifiable. The Insolvency (England and Wales) Rules 2016, as amended by SI 2020/710, prescribe seven 'LM' forms that the directors or monitor must file with the registrar within prescribed periods.

LM1 is the trigger that puts the company on the public register; LM5 takes it off. Between those two filings the company name appears with a 'Moratorium' marker on the Find and Update Company Information service, and an entry is published in the relevant Gazette under rule 1.18 of the IR 2016. Practitioners use Gazette searches rather than the Companies House XBRL feed to track new moratoriums in real time, because LM filings are accepted by paper or webform and the registrar's machine-readable feed lags by a working day or two.

Six years of filings — the numbers

The Insolvency Service's Company Insolvency Statistics publish monthly company moratorium counts for England and Wales. The annual aggregates make the trajectory obvious.

Scottish and Northern Irish moratoriums are reported separately and run at perhaps two or three per year combined. The total UK figure to mid-2026 sits a fraction below ninety. By comparison, English and Welsh administrations ran at 1,564 in calendar 2024 alone, and creditors' voluntary liquidations at 18,840. The moratorium accounts for less than one in five hundred formal insolvency-adjacent procedures.

Why uptake has flatlined

Three structural problems explain the figures, and each is reflected in the practitioner literature R3 has submitted to the Insolvency Service review.

1. The financial-services carve-out. A bank with an accelerated facility is not bound by the moratorium. Section A18(3)(f) excludes 'a debt or other liability arising under a contract or other instrument involving financial services' from the payment holiday. That covers term loans, revolving credit facilities, derivatives, bond debt and most asset-based lending. Because the secured lender remains entitled to be paid in full as instalments fall due, the moratorium is useless against the creditor that most often forces the hand of a distressed mid-market company. Directors who cannot service bank debt cannot lawfully be in a moratorium for more than the few days it takes the monitor to spot it.

2. Super-priority for moratorium debt. Section 174A IA 1986 elevates moratorium debt — broadly, debt incurred during the moratorium that has not been paid by its end — above floating-charge holders, preferential creditors and unsecured creditors in any subsequent administration or liquidation commenced within twelve weeks. Lenders dislike this. Where a moratorium fails into administration, the lender's recovery prospects deteriorate, sometimes materially. Several large banks have reportedly inserted moratorium-triggered events of default into facility documentation since 2021, which compounds the problem in (1).

3. Cost without finality. A moratorium does not bind future creditors and does not, of itself, restructure debt. It buys time to negotiate a Part 26A restructuring plan, a CVA or a pre-pack administration. The monitor's fees and the directors' professional costs over a 40-business-day window are not materially less than those of a pre-pack administration, and the pre-pack delivers a binding outcome. Where there is no realistic restructuring proposal to negotiate during the breathing space, the moratorium adds cost without changing the destination.

How the moratorium compares to the rest of the toolkit

It helps to set out the four headline UK rescue and restructuring procedures side by side. The differences in court involvement, creditor binding and duration explain the practitioner preference patterns the statistics reveal.

When a distressed company has the cash to mount a Part 26A plan, it tends to do so directly without the moratorium. When it does not, administration delivers a binding result and brings the secured lender to the table by force of statute. The moratorium occupies a narrow band — companies large enough to need formal protection, small enough to find administration disproportionate, with no significant senior bank debt — and that band turns out to be tiny.

Who is actually using it

The profile of the eighty-odd companies that have entered a Part A1 moratorium since 2020 is more interesting than the headline number suggests. R3's tracking, cross-referenced against Companies House LM1 filings, shows three loose groupings:

1. Mid-market trading companies (turnover £10m–£60m) with unitranche or asset-based lending facilities and a genuine restructuring counterparty — usually a landlord or a single large trade creditor — to negotiate with. Roughly half the filings.
2. Charities and academy trusts, which lack many of the senior secured creditors that derail moratoriums elsewhere and benefit from the directors-stay-in-office structure. Around fifteen per cent.
3. Special purpose and group holding entities, used tactically while another entity in the group runs a parallel Part 26A plan. The remainder.

The profile suggests the moratorium is closer to its policy intent than the raw count implies. Where it is used, it tends to be used well. The problem is the corner of the market it can serve is small.

The statutory five-year review

Section 49 of CIGA required the Secretary of State to commission a review of the permanent measures (the moratorium and the restructuring plan) within three years and five years of commencement. The five-year review opened in October 2025 and submissions closed in February 2026. A government response is expected during the 2026–27 parliamentary session.

The consensus of the published responses — from R3, the City of London Law Society Insolvency Committee, the Insolvency Lawyers Association and the British Property Federation — is that the moratorium architecture should be retained but the section A18 carve-outs reopened. The two specific recommendations that recur are:

• Narrowing the financial-services exclusion so that ordinary term loans benefit from the payment holiday, while keeping derivatives and master-agreement netting out of scope.
• Reducing or removing the twelve-week super-priority window in section 174A, so that moratorium debt loses its preferential status if the company subsequently enters administration after a reasonable interval.

Neither change requires primary legislation alone. The Insolvency Service can recommend amendment of the Insolvency Rules and the IA 1986 schedules together. Whether the political appetite exists in the 2026–27 session for an insolvency reform bill is a separate question; the Procurement Act and ECCTA timetables continue to absorb most of the available departmental capacity.

What practitioners should take away

For advisers considering whether a Part A1 moratorium is worth proposing to a board, the practical filter is now well understood. If there is significant senior bank debt that cannot be serviced through the moratorium period, the moratorium is not viable. If there is no realistic restructuring counterparty to negotiate with during the breathing space, the moratorium will simply delay administration at additional cost. Where neither applies — and the case profile above shows that this combination does exist — the moratorium remains a usable, public-register-light tool that keeps directors in office and avoids the optics of an administration appointment.

For anyone monitoring the Companies House register for distress signals, the LM-series filings remain a leading indicator. An LM1 filed in a quiet quarter is typically followed within four to six months either by a Part 26A restructuring plan order or by an administration appointment — and occasionally, in the best cases, by an LM5 and a return to ordinary trading.