Companies Act 2014 section 520A

Restrictions on certain contracts during examinership

Section 520A protects a company's existing contracts from being disrupted by creditors solely because the company has entered, or is entering, the examinership process.

• Creditors cannot terminate, withhold performance of, accelerate or otherwise modify executory contracts to the company's detriment solely because an examiner has been sought or appointed, or the company has been placed under court protection
• These protections override any contractual clauses that would otherwise allow creditors to take such actions in these circumstances
• Additional protections apply to essential executory contracts while the company is under court protection — creditors cannot interfere with these contracts even on the basis that the company is deemed unable to pay its debts
• An executory contract is one where both parties still have outstanding obligations to perform at the time court protection begins; an essential executory contract has the meaning given by the EU Preventive Restructuring Directive