The following Restructuring & Insolvency guidance note provides comprehensive and up to date legal information covering:
This Practice Note refers to the Insolvency Act 1986 as IA 1986.
This guide is a summary of company voluntary arrangements (CVAs) and their impact on legal proceedings from a dispute resolution perspective (for full details, see: Company Voluntary Arrangements—overview).
A CVA is a contractual agreement between a company and its creditors and is the corporate equivalent of an individual voluntary arrangement (IVA) for individuals. The company need not be insolvent to propose a CVA. The main benefits of a CVA include:
there is no need to prove insolvency, so action can be taken early at the first signs of financial distress
if the CVA is approved by the requisite majority (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) it can be imposed on unsecured dissenting creditors, which is a process known as cramdown (see Practice Note: The CVA proposal and procedure—the position under the Insolvency (England and Wales) Rules 2016)
the CVA proposal will bind creditors who are unaware of the CVA proposal/creditors' decision making procedure
The main limitation, however, is the lack of any automatic moratorium (few companies qualify as small companies for the moratorium) and although the Insolvency
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