The CVA proposal and procedure—the position under the Insolvency (England and Wales) Rules 2016
Produced in partnership with KPMG and Lexa Hilliard QC of Wilberforce Chambers

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

  • The CVA proposal and procedure—the position under the Insolvency (England and Wales) Rules 2016
  • Procedure—directors’ proposal
  • Procedure—administrator’s or liquidator’s proposal (where they are also the nominee)
  • Procedure—administrator’s or liquidator’s proposal (where they are not the nominee)
  • Contents of the proposal—all procedures
  • Consideration of the proposal
  • Requisite majorities

The CVA proposal and procedure—the position under the Insolvency (England and Wales) Rules 2016

The company voluntary arrangement (CVA) proposal will contain the terms of a compromise between a company and its creditors, and therefore must be comprehensive and accurate. Where the proposal or circumstances are complex, the draft should be reviewed or prepared by a lawyer to ensure it correctly reflects the intentions of the arrangement. The proposal needs to be clear and understandable.

The proposal should be fair to the company, its creditors and any other parties involved. This does not mean that all creditors must be treated in the same way, though to avoid the risk of a challenge, any differing treatments must be justifiable (see Practice Note: Challenging the approval of a CVA—unfair prejudice, material irregularity: the position under The Insolvency (England and Wales) Rules 2016).

A CVA may be proposed either by the:

  1. directors, where the company is not in an insolvency process, or

  2. administrator or liquidator

SIP 3.2 sets out the required contents of the proposal. The requirements of the proposal are broadly the same in each case (see below).

Procedure—directors’ proposal

The Insolvency (England and Wales) Rules 2016 (IR 2016), SI 2016/1024 apply to CVAs (for further reading generally see: The Insolvency (England and Wales) Rules 2016—overview, for any transitional provisions, see Practice Note: The Insolvency (England and Wales) Rules 2016—Schedule

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