Background
Together Commercial Finance lent £2.4 million to Ameycroft Leisure Ltd in August 2023 under a commercial loan agreement. The lender took security including a legal charge over Farley Meadow View, Matlock, owned by Matthew Stuart Slack, whose father was the borrowing company’s director. When the company defaulted in June 2024, Together appointed fixed-charge receivers and demanded immediate repayment of £2,433,636.18. The company entered compulsory liquidation without paying; Mr Slack also did not pay.
In April 2026, Mr Slack entered into a mental health crisis moratorium under the Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020, with Toynbee Hall as his debt advice provider. The receivers sought to sell the charged property to satisfy the secured debt, but Mr Slack contended that the moratorium prevented enforcement action during its term.
The Court’s Holding
The court analysed the charge document and concluded that Mr Slack’s charge secured only the company’s indebtedness under the loan agreement, not his own personal covenant to pay (clause 2.1.a.). However, Mr Slack’s personal covenant created a separate debtor-creditor relationship between him and Together, giving rise to a qualifying debt independent of the charge. Under the regulations, this personal debt constituted a moratorium debt subject to protection.
Regulation 7(6) prohibits “enforcement action” in respect of moratorium debts, including under 7(6)(c) to “enforce security held in respect of a moratorium debt” and 7(6)(e) to “sell or take control of a debtor’s property or goods.” The court found that selling the property would constitute enforcement action against Mr Slack, the moratorium debtor, despite the property being charged as security for the company’s separate debt. Under regulation 7(12), any such action is null and void.
Key Takeaways
- A mental health crisis moratorium protects a debtor’s property from sale by receivers even when the property secures a separate entity’s debt, if the debtor has incurred a personal obligation in respect of that debt.
- A personal payment covenant by a property owner in favour of a lender creates a qualifying debt separate from the debt of the primary borrower, even where the owner’s sole recourse is secured against the property.
- Enforcement action under the Debt Respite Scheme regulations includes receiver sales of a moratorium debtor’s property, and such action is rendered null and void.
Why It Matters
This decision clarifies that mental health crisis moratoriums provide robust protection against asset enforcement, extending beyond the debtor’s own borrowing to shield property from receivers appointed to enforce security. Lenders taking personal guarantees or payment covenants secured by third-party property now face restrictions on enforcement during a moratorium period, which may encourage forbearance negotiations or prompt creditors to seek court permission for enforcement under regulation 19.
For commercial lenders and secured creditors, the ruling demonstrates that the Debt Respite Scheme regulations operate with substantive effect even when security is held against assets not owned by the primary borrower, provided the moratorium debtor has incurred a personal obligation. Creditors must seek relief from the court before proceeding with enforcement, establishing grounds under regulation 17 (unfair prejudice or material irregularity) if the moratorium continues.