Challenging the approval of a CVA—unfair prejudice, material irregularity: the position under The Insolvency (England and Wales) Rules 2016
Produced in partnership with Lexa Hilliard QC of Wilberforce Chambers
Challenging the approval of a CVA—unfair prejudice, material irregularity: the position under The Insolvency (England and Wales) Rules 2016

The following Restructuring & Insolvency guidance note Produced in partnership with Lexa Hilliard QC of Wilberforce Chambers provides comprehensive and up to date legal information covering:

  • Challenging the approval of a CVA—unfair prejudice, material irregularity: the position under The Insolvency (England and Wales) Rules 2016
  • Grounds to challenge the company voluntary arrangement
  • Entitlement to challenge the CVA
  • Time limit for challenge to the CVA
  • Unfair prejudice
  • Material irregularity
  • Powers of the court on a challenge to the CVA

Grounds to challenge the company voluntary arrangement

An application can be made to challenge the approval of a company voluntary arrangement (CVA) on one or both of two grounds:

  1. that the arrangement unfairly prejudices the interests of a creditor, member or contributory of the company

  2. that there has been some material irregularity at or in relation to the meeting of the company or in relation to the relevant qualifying decision procedure (see SIP 6)

A challenge to a CVA on the basis of an irregularity at or in relation to a decision taken at a company meeting or a decision of the creditors made in the relevant qualifying decision procedure may only be pursued in accordance with the statutory scheme. However, where the alleged flaw in the CVA is so serious that the CVA is rendered null and void, the statutory scheme (including the strict time limits) will not apply (see Re Plummer).

Entitlement to challenge the CVA

The following persons may apply to challenge the approval of a CVA:

  1. a person entitled to vote at the meeting of the company or in the relevant qualifying decision procedure or

  2. a person who would have been so entitled to vote in the relevant qualifying decision procedure had they had notice of it

  3. the nominee, and

  4. a liquidator or administrator of