Where a moratorium, or suspension, of winding-up proceedings is sought by a company, relevant documents must be filed with the court which must support any such request.
Included within these documents is the agreement from a ‘Proposed Monitor’ effectively reflecting the Consent to Act provisions that currently apply to administrators appointed to a company (under insolvency legislation).
Joint monitors can also be appointed.
A monitor must (as the name suggests) monitor the company’s affairs to ensure that any information provided by the company to the court is accurate and report to the court as to whether the company is capable of being rescued as a going concern. The directors (and indeed the company) have a duty to provide a monitor (or joint monitors) with any information requested to enable them to fulfil their function.
Any creditor of the company (or indeed shareholder) can complain about a monitor’s actions, in a similar fashion as to how liquidators and administrators can be liable for misfeasance (although we anticipate that, due to the speed at which current events are moving, such complaints against monitors may be more frequent).
Such complaints may arrive later, particularly where monitors’ reports to the court misrepresent events or lead to losses by creditors (or the company).
Similar challenges can be made as to the fees and remuneration charged by monitors, who ultimately remain accountable to creditors (as do the directors in accordance with their own fiduciary duties).
The process will be familiar to most insolvency professionals, as these legislative provisions reflect most of those provisions already in place for appointed liquidators and administrators, and indeed represent a hybrid between a supervisor of a Company Voluntary Arrangement and an insolvency practitioner appointed within an insolvency process.
If you require any guidance on the Corporate Insolvency and Governance Bill, please do not hesitate to get in touch.