Stabilisation and restructuring law in the UK

1. Which financial (not tax or labour) short-term compensation schemes for immediate losses due to social distancing measures have been implemented? For which industries/sizes of business?

The UK Government has proposed a number of schemes in relation to the UK tax regime to assist businesses with their cash-flow.

  • Business Rates Relief: a business rates holiday for all businesses in the retail, hospitality and leisure sector for the next 12 months, irrespective of rateable value of properties.  
  • Small businesses cash grants: any business with retail, leisure and hospitality property with a rateable value of less than £51,000 for the 2020/21 period, can claim up to £25,000 by way of cash grant from the Government.
  • PAYE liabilities: PAYE due to be paid for month 11 (March 2020) can be deferred for two months, subject to specific agreement with HMRC via the COVID-19 helpline. No guidance is available yet in relation to month 12 (April 2020).
  • "Time to Pay": Ability to agree specific tax payment arrangements (deferrals/instalments) with HMRC, enables businesses to avoid penalties for failure to pay tax.- Income Tax Self-Assessment: payments for the self-employed due on 31 July 2020 have been deferred to 31January 2021.
  • VAT: accounting for VAT for the first quarter of 2020 has been deferred.  Businesses have to account for the VAT for this quarter by the end of the financial year.
  • Managing Staff Costs:  Many businesses are facing the dilemma of whether to lay staff off without pay, operate short time working or make staff redundant and re-recruit if they can when the current crisis has passed.  The UK Government is eager to ensure that as many people stay employed as possible and has therefore made available a non-refundable grant for businesses of up to 80% of the wages of those staff who are “furloughed” (i.e. sent home without pay and not made redundant), subject to a cap of £2,500 a month.  The grant will be backdated to 1 March 2020.  On the face of it, the grant is only available in respect of employees who are not provided with any work from 1 March, leaving those who have been willing to operate on a short time (and reduced pay) basis disadvantaged. 
  • Reimbursement of statutory sick pay (SSP): The UK Government has introduced new legislation that allows employees to claim SSP from day 1 of a period of illness or self-isolation in accordance with Public Health England guidance due to Covid-19.  Employers with less than 250 employees will be entitled to a reimbursement (rather than an upfront payment) for up to two weeks’ SSP for each employee absent from work because they are ill or self-isolating as a result of Covid-19.  The reimbursement will not apply to an employ-er’s more generous sick pay terms.  Where enhanced sick pay is at the discretion of the employer (rather than strictly contractual), the employer will need to give careful consideration to whether it can afford to pay employees more than SSP.  Where enhanced sick pay is contractual and the employee is unfit for work, the enhanced sick pay will be payable.  Where the employee is fit for work, but self-isolating on the advice from Public Health England, unless they can work from home, they are likely only to be entitled to SSP.

2. Which medium-to long-term stabilisation measures are in place in your jurisdiction?

See response to question 3.

3. Which measures (Guarantees, Loans, Equity Injections, etc.) are available?

Covid Commercial Financing Facility (CCFF):
  • Structure: participants issue corporate debt instruments, which will be purchased by a fund established by the Bank of England
  • Eligibility
    • Businesses of any size that make major contribution to UK economy (determined in a number of ways but measured by reference to employees, revenue and/or operations which are in the UK)
    • Participant must be UK incorporated but can have a foreign parent if it meets the “UK contribution” test
    • Available to businesses with a minimum credit rating or who can demonstrate equivalent financial strength
  • Period: Any between one week and maximum of 12 months
  • Value: A minimum of £1m for each issuance.  No maximum specified but will be assessed on an individual basis
  • Process: Businesses will need to have, or set up, suitable debt documentation in place to be able to use the CCFF. One or more banks will need to be involved to act as intermediaries between the Bank of England and the business
Coronavirus Business Interruption Loan Scheme: 
  • Structure: typical forms of lending (terms loans, invoice facilities, overdrafts) available through commercial lenders and backed by the UK Government. The government will provide lenders with a guarantee of up to 80% on each loan (subject to an overall cap for each lender). Potential participants should contact their lender for further information.   The UK Government will make a payment to cover interest and any lender fees for most eligible businesses for the first twelve months so initial repayments will be lower. Fishery, aquaculture and agriculture businesses may not qualify for the full interest and fee payment in that period. The Borrower always remains liable for 100% of the debt.
  • Eligibility: UK based businesses with an annual turnover of up to £45m (increased on Friday 20 March from £41m), which derive 50% of their annual turnover from trading.  The eligibility criteria is still to be fully established, but it is open to sole traders, corporates, limited partnerships, limited liability partnerships and freelancers.  Banks, building societies, insurers, reinsurers (but not insurance brokers) and the public sector are not eligible to apply. Employer, professional, religious and political membership organisations and trade unions are also excluded. The UK government announced an extension to the scheme on 2 April confirming that loans of up to £25m will be available to companies with annual turnover between £45m and £500m. 
  • Purpose: To assist businesses that cannot meet a lender’s normal lending criteria due to the impact of the pandemic and a downturn in trading but would be considered viable in the longer term.
  • Period: Up to 6 years for term and asset finance facilities, 3 years for overdrafts and invoice finance facilities.
  • Security: The facility can be used for unsecured lending of up to £250,000 (and banks to be prevented from insisting on personal guarantees or other personal security to support such loans). Applications for CBIL scheme loans will not be limited to businesses already refused a loan on commercial terms. If your lender can offer facilities without using the scheme it will do so.
  • Value: For lending up to £25m.
  • Availability: The loan scheme will be available for an initial 6-month period.

4. Have these mid- to long-term stabilisation measures already been notified with EU or other antitrust bodies?



To be confirmed.

5. Which prerequisites are necessary to qualify for a programme?

See answer to question 6.

6. Are there any major reasons that may inhibit an applicant from successfully applying for a stabilisation measure?


Please specify.

For access to CBILS an applicant needs an otherwise viable business plan which but for the pandemic would have been viable. However access is no longer conditional on commercial loan terns having been refused. For the access to CCFF entities must have had a minimum short-term credit rating (or equivalent, whether minimum long-term rating or otherwise) pre Covid.

7. In an international context, are subsidiaries and branches of foreign parent/holding companies eligible to apply? For EU-States: Also for non-EU-third countries?


Please specify.

Yes if the subsidiary qualifies under the criteria set out above.

8. Do your country’s stabilisation schemes foresee restrictions on use of cash/other restrictions?



Nothing so far but it is evolving.

9. How are insolvency application deadlines handled in times of Corona?

So far the UK courts have indicated they intend to continue to be open for business recognising (1) urgent business will be prioritised (2) judges and operational staff encouraged to take a pragmatic approach (3) telephone and online court processes will be used wherever possible (rules have been in place for some time to allow this) and (4) parties encouraged to find compromises wherever possible. 
However we are expecting shortly more specific practical support by way of a court practice direction to assist with the handling of insolvency processes to - 

  • allow hearings to be conducted remotely; outlining a clear procedure for doing so; and 
  • permit the fast and efficient appointment of administrators and offer guidance on re-listing cases according to their urgency.   

10. How far have local insolvency/restructuring laws been changed/eased which might have an impact on international businesses?

So far no changes or alterations to insolvency laws have been implemented. However, the UK government has announced it will introduce a number of measures at the earliest opportunity - 

  1. Relaxation or suspension of wrongful trading provisions for company directors to reduce the threat of personal liability during the COVID-19 crisis, to be applied retrospectively from 1 March;
  2. The government is fast-tracking the implementation of certain reforms announced in August 2018. New legislation will add the following restructuring tools -
    1. the option for a company in financial difficulty to access a new pre-insolvency moratorium to provide breathing space to consider rescue options;
    2. a prohibition on the enforcement of termination clauses which permit one party to terminate contracts based on the insolvency or financial condition of the other party; and
    3. the introduction of a new standalone restructuring procedure that can be used by solvent or insolvent companies and can be used to bind dissenting stakeholders to a restructuring plan.   . As announced on 23 March 2020 landlords of commercial premises will be prevented from forfeiting (ending early) a lease for a three-month period for non-payment of rent. This is not rent forgiveness but a moratorium on the forfeiture remedy. It reflects what in practice many commercial tenants are seeking.  



We expect the judiciary to apply existing regimes adaptively rather than specific legislation 

Administration remains the main process for UK restructuring outside of a wind down but schemes of arrangement and company voluntary arrangements can also be used. However please see the response to 2.18 where we note that a new standalone restructuring procedure is to be brought into law as a matter of urgency.  This will have similarities to schemes of arrangement and will require votes of shareholders and creditors and court approval on a restructuring plan. The threshold for approval of the restructuring plan will be 75% within each creditor ‘class’ and with the inclusion of some cross-class cram down provisions.

Portrait of Peter Wiltshire
Peter Wiltshire