Key elements of a standstill agreement

Published by a ��˾��ҹ�� Restructuring & Insolvency expert

Practice notes

Key elements of a standstill agreement

Published by a ��˾��ҹ�� Restructuring & Insolvency expert

Practice notes

When restructuring is considered rather than formal Insolvency proceedings (see Practice Note: Benefits of informal restructuring over formal proceedings) the company may want to ensure that relevant creditors quickly enter a Standstill agreement to gain some breathing space to consider a restructuring plan.

A standstill agreement is an agreement between the company and its creditors restraining creditor Enforcement action (see Precedent: Standstill agreement).

Parties

The debtor company will be a party, together with operating subsidiaries holding valuable assets or at risk of formal proceedings or breaching their financial covenants, as well as usually the ultimate parent company. Other parties will be creditors and other stakeholders who are essential to the success of the company, eg key customers, suppliers (if the company is a critical client, useful concessions may be obtained) and the pensions trustee/regulator (if there is a large defined benefit pensions Deficit).

Who has a seat at the negotiating table (and who should be party to the standstill) depends on where value is expected to break (see Practice Note: Where the value breaks and negotiating

Jurisdiction(s):

United Kingdom

Key definition:

Standstill agreement definition

What does Standstill agreement mean?

An agreement between the company and its creditors restraining creditor enforcement action.

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