Ongoing contract in insolvency: review performance and withdrawal

If the administrator elects performance, the existing contract remains the basis for scope, quality, acceptance and due dates. Insolvency does not automatically create new terms for either side.

If the administrator withdraws, section 21(2) IO allows the counterparty to claim compensation for the resulting loss as an insolvency creditor. The loss does not automatically equal the total order value. Completed parts, saved expenditure, security and the actual calculation require separate treatment.

For divisible performance, also record which parts were completed before proceedings opened and which remain outstanding. The claim and future performance should not be combined into one undifferentiated position.

The counterparty may ask the insolvency court to set a period for the administrator’s decision. Section 21(2) IO provides the framework and a separate rule where the debtor owes non monetary performance and is already in default. These cases require the current statutory text and must not be reduced to one general response period.

A letter to the administrator should identify the contract, case reference, opening date, performance on both sides and the precise decision requested. A private deadline does not change the statutory mechanism.

Where the counterparty must perform first, section 21(3) IO may permit withholding until counter performance or security is provided. A relevant issue is whether the debtor’s poor financial position should have been known when the contract was concluded.

Section 22 IO does not cover every agreed delivery date. It applies to goods with a market or exchange price where delivery is fixed for an exact time or period and that time falls after proceedings open.

Section 23 IO applies where the debtor has taken an asset on lease. The administrator may terminate using the statutory or shorter agreed notice period. Lessors should therefore assess the contract, notice period and possible damages separately.

Section 25a IO may protect business continuation from specified terminations by counterparties. Financial deterioration and default on claims due before proceedings opened do not, without more, constitute good cause for this purpose. The statutory exceptions require separate review.

A reliable contract file includes the signed contract and amendments, orders, specifications, acceptances, delivery notes, invoices, payments and communications about disruption. For digital services, record access credentials, usage rights, data holdings and handover duties.

Prepare a four column table showing your performance, the debtor’s performance, the due date and the supporting evidence. Mark disputed points instead of presenting them as settled. This helps the administrator respond precisely and prevents unpaid claims from being mixed with future obligations.

Keep the court notice, case reference and verified administrator contact. Payments, recovery of goods, set off or contract amendments should not rest only on informal messages.

Continued performance may be commercially sensible where counter performance, security and operations are reliably defined. A high nominal order value is insufficient. Procurement, unfinished work, warranty exposure, dependencies and the actual source of payment matter.

Withdrawal by the estate may create an insolvency claim but does not resolve every ancillary issue. Ownership of materials, return of documents, usage rights, confidentiality and data access may continue or follow separate rules.

The purpose of review is not a generic continue or stop recommendation. It is a documented course that aligns the contract, the Insolvency Code and the commercial consequences.