Jurisdiction(s):
United Kingdom

Key definition

Standstill agreement definition

What does Standstill agreement mean? A standstill agreement is a contractual forbearance under which one or more creditors agree, for a defined period, not to take or continue enforcement action (for example, acceleration, demands, litigation, appointment of receivers/administrators or security enforcement) against a company while the parties negotiate a restructuring or workout. It is a descriptive term used across corporate finance, restructuring and disputes; it is not itself a statutory moratorium. Key features typically include: scope of the standstill and permitted actions; duration and early termination triggers; reservation of rights and acknowledgments of default; information and access undertakings; payment and cash‑control mechanics; consent thresholds (often aligned...

Corporate restructuring standstill agreements under English law: parties, majority thresholds, good faith, moratorium scope, duration, commencement, termination and drawbacks

Published by a LexisNexis Restructuring & Insolvency expert

Practice notes

When a restructuring is pursued instead of commencing formal Insolvency proceedings (see Practice Note: Benefits of informal restructuring over formal proceedings), the company will often aim to secure swift standstill commitments from relevant creditors to create breathing room to shape a restructuring plan. A Standstill agreement is a contract between the company and its creditors that pauses Enforcement action (see Precedent: Standstill agreement).

Parties

The debtor company will sign, typically alongside operating subsidiaries that hold significant assets, could be exposed to formal action or risk breaching financial covenants, and, in many cases, the ultimate parent company. Other participants usually include creditors and stakeholders critical to the company’s success, eg major customers, suppliers (if the company is a key client, helpful concessions might be secured) and the pensions trustee/regulator (where there is a substantial defined benefit pensions Deficit).

Who is invited to negotiate—and who should be bound by the standstill—depends on where value is expected to break (see Practice Note: Where the value breaks and negotiating strength). In structures with multiple debt layers, creditor classes may have competing agendas. Appreciating their respective positions is essential...

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Web page updated on 27/05/2026

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