In what circumstances can a CVA be proposed and by whom?
Produced in partnership with Lexa Hilliard QC of Wilberforce Chambers
In what circumstances can a CVA be proposed and by whom?

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:

  • In what circumstances can a CVA be proposed and by whom?
  • What is a CVA?
  • The CVA proposal and nominee
  • The legal nature of a CVA
  • Why was the CVA introduced?
  • Is a CVA a stand-alone procedure?
  • Which entities can use the CVA procedure?
  • What can a CVA be used for?
  • Who may propose a CVA?
  • Who is the CVA proposal made to?

In what circumstances can a CVA be proposed and by whom?

What is a CVA?

A company voluntary arrangement (CVA) is a binding arrangement made between a company and its creditors (IA 1986, Pt I). It is the corporate equivalent of the individual voluntary arrangement (IVA). The company need not be insolvent to propose a CVA.

The CVA was a major innovation introduced by IA 1986, Pt VIII. In contrast to IVAs, they initially did not prove so popular (with administrations being used instead) but have seen a resurgence when dealing with landlord’s liabilities. From 6 April 2017, the Insolvency (England & Wales) Rules 2016 (IR 2016), SI 2016/1024 apply to CVAs .

A key, attractive, feature of a CVA is the ability of a majority of three-quarters in value of approving creditors to bind the minority of creditors even if they do not agree (see Practice Note: Corporate Insolvency and Governance Act 2020—differences between restructuring plans, schemes of arrangement, and CVAs).

The CVA proposal and nominee

A CVA proposal is one which provides for a person called the nominee to act in relation to the voluntary arrangement, either as trustee or otherwise, for the purpose of supervising the process up to and including the CVA proposal’s approval.

The nominee must be a qualified insolvency practitioner.

Under IR 2016, the proposal for a CVA must additionally contain identification details for the company

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