Benefits of a scheme of arrangement compared to other processes
Produced in partnership with Riccardo Alonzi and Jonathan Akinluyi of Skadden Arps Slate Meagher & Flom (UK) LLP
Benefits of a scheme of arrangement compared to other processes

The following Restructuring & Insolvency practice note Produced in partnership with Riccardo Alonzi and Jonathan Akinluyi of Skadden Arps Slate Meagher & Flom (UK) LLP provides comprehensive and up to date legal information covering:

  • Benefits of a scheme of arrangement compared to other processes
  • Brexit impact

The table below compares the features and benefits of a scheme of arrangement (see: Schemes of arrangement—overview) with two alternate processes available in England and Wales, the company voluntary arrangement (CVA) (see: Company voluntary arrangements—overview) and administration (see: Administration—overview).

While CVAs and schemes are truly alternatives, in that they cannot be jointly pursued, administration is a distinct insolvency process that may be combined with either a scheme or CVA.

Scheme of arrangementCVAAdministration
Control of process
A scheme of arrangement is not a formal insolvency proceeding and the making of an application for the court in a scheme has no effect on the management of the company.A CVA is implemented under the supervision of the nominee/supervisor, who must be an insolvency practitioner; however, the directors remain in control of the company.An administration is a formal insolvency process in which an insolvency practitioner, the administrator, displaces the directors and takes control of the company.
European legislation
As noted above, a scheme of arrangement is not a formal insolvency proceeding and falls outside the scope of Regulation (EU) 2015/848 on insolvency proceedings (Recast Insolvency Regulation).CVAs are listed as one of the insolvency proceedings in Annex A of the Recast Insolvency Regulation and must therefore meet the jurisdictional tests and other requirements contained in the Recast

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