The following Restructuring & Insolvency guidance note Produced in partnership with Cathryn E Williams of Crowell & Moring LLP provides comprehensive and up to date legal information covering:
A CVA is a tool available to a company in financial difficulty to restructure its debts. In contrast to other insolvency procedures, the directors remain in control of the business which continues to operate broadly as normal, subject to the supervision of an insolvency practitioner (the Supervisor).
A CVA is a statutory contract between the company and its creditors, which is intended to produce a better financial return than if the company was placed into a formal insolvency procedure. The proposals will be funded either by a lump sum payment or an agreed schedule of payments over a defined period (usually between 1–5 years). If 75% or more in value of the company’s creditors vote in favour of the proposals, they become binding upon all of the company’s unsecured creditors, including those who (1) voted against the proposals and (2) were eligible to vote but did not receive notice of the decision procedure/meeting (as relevant).
Once bound by a CVA, a creditor cannot take any step against the company to:
recover any debt that falls within the scope of the CVA (CVA Debt), or
enforce any rights against the company that arise from failure to pay the CVA Debt in full
There is generally no moratorium available to a company proposing a CVA unless it is
**excludes LexisPSL Practice Compliance, Practice Management and Risk and Compliance. 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
Take a free trial
0330 161 1234