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
**Trials are provided to all LexisPSL and LexisLibrary content, excluding Practice Compliance, Practice Management and Risk and Compliance, subscription packages are tailored to your specific needs. To discuss trialling these LexisPSL services please email customer service via our online form. Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason. Trial includes one question to LexisAsk during the length of the trial.
To view the latest version of this document and thousands of others like it, sign-in to LexisPSL or register for a free trial.
Existing user? Sign-in
Take a free trial
0330 161 1234
To view our latest legal guidance content,sign-in to Lexis®PSL or register for a free trial.