Creditors' consideration of company voluntary arrangement (CVA) proposals

Copyright © 2025 LexisNexis
Produced in partnership with William Willson of South Square Chambers and Nora Wannagat of Tanfield Chambers
Practice notes

Creditors' consideration of company voluntary arrangement (CVA) proposals

Copyright © 2025 LexisNexis

Produced in partnership with William Willson of South Square Chambers and Nora Wannagat of Tanfield Chambers

Practice notes
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The Insolvency (England and Wales) Rules 2016 (IR 2016), SI 2016/1024, provide a scheme for decision-making in all insolvency procedures. While decision-making is dealt with in IR 2016, SI 2016/1024, Pt 15, company voluntary arrangements (CVAs) are dealt with in IR 2016, SI 2016/1024, Pt 2.

For information on decision-making generally, see Practice Note: Voting and creditors' decision procedures.

Creditor claims

There is no statutory definition of the term ‘creditor’ in Insolvency Act 1986 (IA 1986) or IR 2016, SI 2016/1024 for the purpose of a CVA.

In respect of individual voluntary arrangements (IVAs), the terms ‘debt’ and ‘liability’ are each defined so as to cover ‘debts or liabilities which are present or future, certain or contingent or in respect of an amount which is fixed or liquidated or is capable of being ascertained by fixed rules or as a matter of opinion’ with the term ‘creditor’ being defined with reference to the term ‘bankruptcy debt’.

In the context of CVAs, the term ‘creditor’

William Willson
William Willson

South Square Chambers

William Willson was called to the Bar in 2006 after a career as a journalist/documentary producer. His core areas of practice include insolvency/restructuring, company law and commercial litigation/arbitration. His recent cases include the Lehman Brothers 'RASCALS' litigation ([2011] EWCA Civ 1544, [2010] EWHC 2914 (Ch)) and the Northern Rock shareholder compensation litigation ([2011] UKUT 408 (TCC)).

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Nora Wannagat
Nora Wannagat

Barrister, Tanfield Chambers

Nora became a member of Tanfield Chambers in September 2024. Prior to that, she was a member of 9 Stone Buildings, after successful completion of her pupillage there. She is developing a broad commercial and chancery practice with an emphasis on insolvency. She is frequently instructed as sole counsel, but has also acted as a junior in a substantial fraud case involving more than 25 contested hearings. She has written about one of them here: The effect of debarring orders in complex fraud cases (Re Grosvenor Property Developers Ltd (in liquidation)), Lexis PSL

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Jurisdiction(s):
United Kingdom
Related legal acts:
Key definition:
Insolvency definition
What does Insolvency mean?

This can be defined by two alternative tests (Insolvency Act 1986, s 123):

• cash flow test: a company is solvent if it can pay its debts as they fall due, no matter what the state of its balance sheet (Re Patrick & Lyon Ltd [1933] Ch 786);

• balance sheet test: a company which can pay its debts as they fall due may be insolvent if, according to its balance sheet, liabilities (including contingent liabilities) exceed assets.

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