Failure of the company voluntary arrangement (CVA)
Produced in partnership with Lexa Hilliard QC of Wilberforce Chambers

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

  • Failure of the company voluntary arrangement (CVA)
  • Contractual effect of CVA
  • When does the CVA terminate for breach?
  • Effect of CVA failure on CVA assets
  • Effect of revocation of a CVA
  • Effect of winding up the company
  • How should the supervisor petition for winding up?

Failure of the company voluntary arrangement (CVA)

There is no definition of ‘failure’ of a company voluntary arrangement (CVA) in the Insolvency Act 1986 (IA 1986). It does not explain when failure will take place, or what its effect will be.

However, the IA 1986 does recognise that an arrangement may ‘come to an end prematurely’ (see IA 1986, ss 5(2A)(b), 6(3)). This is defined as occurring when the CVA ceases to have effect ‘it has not been fully implemented in respect of all persons bound by the arrangement’ (see: IA 1986, s 7B).

The Insolvency (England and Wales) Rules 2016, SI 2016/1024 (IR 2016) apply to CVAs and also make some provision as to what must be done after termination; not more than 28 days after termination of the voluntary arrangement, the supervisor must serve a notice that the CVA has been terminated (see: IR 2016, SI 2016/1024 r 2.44(1).

The notice must be accompanied by a report summarising receipts and payments and explaining why the arrangement has terminated. It must also include a statement of the amount paid (if any) under the prescribed part provision of IA 1986, s 176A (see: IR 2016, SI 2016/1024 r 2.44(2) and Practice Note: Corporate Insolvency and Governance Act 2020—impact on CVAs).

The supervisor must send the notice and report within 28 days to the Registrar of Companies and the

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