The following Banking & Finance guidance note provides comprehensive and up to date legal information covering:
On 6 April 2017 the Insolvency (England and Wales) Rules 2016 (IR 2016), SI 2016/1024 replaced the Insolvency Rules 1986 (IR 1986), SI 1986/1925.
For a summary of the changes to CVAs, see Practice Note: The Insolvency (England and Wales) Rules 2016—Part 2: Changes to company voluntary arrangements (CVAs) [Archived].
The applicable legislation in this area is the Insolvency Act 1986 (IA 1986) and the Insolvency (England and Wales) Rules 2016, SI 2016/1024 .
A company voluntary arrangement (CVA) is a contractual agreement between a company and its creditors and is the corporate equivalent of individual voluntary arrangements (IVAs) for individuals. The main benefits of CVAs include:
there's no need to prove insolvency, so action can be taken early at the first signs of distress
dissenting unsecured creditors can be crammed down if the CVA is approved by 75% in value of creditors present in person or by proxy and voting on the proposal (and not opposed by more than 50% of independent creditors ie those who are not associates). The CVA proposal will even bind creditors who are unaware of the CVA proposal/creditors' decision procedures
However, the main limitation is the lack of any automatic moratorium (few companies qualify as small companies for the moratorium; see News Analysis: Government proposes legislation to enhance UK insolvency regime). Accordingly, CVAs are sometimes combined
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