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Corporate voluntary arrangements (CVA) including CVA moratoria


1. What is a corporate voluntary arrangement?

A corporate voluntary arrangement is when a company makes an agreement with its creditors by proposing a 'composition in satisfaction of its debt' or a 'scheme of arrangement of its affairs'. This means an arrangement, approved by the court, in which the company has formally agreed terms with its creditors for the settlement of its debts.

2. Who may propose a corporate voluntary arrangement?

A corporate voluntary arrangement may be proposed by:
the administrator, if there is an administration order;
the liquidator, if the company is being wound up; or
the directors, in other circumstances.
3. Who considers the proposal?

When the directors have proposed the arrangement, the nominee appointed to supervise its implementation reports to the court within 28 days on whether, in his or her opinion, meetings of the company and of its creditors should be called.

4. How is a proposed corporate voluntary arrangement approved?

The meetings summoned by the nominee decide whether to approve the arrangement which, subject to certain restrictions, may be approved with or without modifications. It is then binding on all creditors who had notice of the meeting and were entitled to vote. All creditors who had notice of the meeting are bound by the terms of the arrangement.

5. What happens when the corporate voluntary arrangement is approved?

If the meetings of members and creditors approve the arrangement, then the nominee or his replacement becomes the supervisor of the arrangement.

6. What needs to be sent to Companies House?

The supervisor must send a copy of the chairman's report of the meeting.

At least once every 12 months, the supervisor must send an account of receipts and payments, together with a progress report, to all interested parties including the Registrar.

When the arrangement is completed, the supervisor must notify the Registrar within 28 days after final completion. If the arrangement is suspended or revoked, the Registrar must be notified.

The appropriate forms are:

Form title Number
Report of a meeting approving a corporate voluntary arrangement 1.1
Order of revocation or suspension of corporate voluntary arrangement 1.2
Voluntary arrangement's supervisor's abstract of receipts and payments 1.3
Notice of completion of corporate voluntary arrangement 1.4
Please note: These forms are not available from Companies House. They can be obtained from company law stationers or by visiting the Insolvency Service website.

7. Corporate voluntary arrangement moratorium

The Insolvency Act 2000 introduced the option of a moratorium into the existing corporate voluntary arrangement procedures.

The courts decide whether a company is eligible for a moratorium. The moratorium will normally last for a period of 28 days and will be managed by a nominee, who may or may not be a registered insolvency practitioner.

The Insolvency (Amendment)(No2) Rules 2002 came into force on 1 January 2003 and introduced the following statutory forms that are required to be filed with the Registrar of Companies:

Form title Number
Commencement of Moratorium 1.11
Extension of a Moratorium 1.12
Ending of a Moratorium 1.14
Withdrawal of Nominee’s consent to Act 1.16
Appointment of a replacement Nominee 1.18
Please note: These forms are not available from Companies House. They can be obtained from company law stationers or by visiting the Insolvency Service website.

At the end of a moratorium a company may (or may not) proceed to a corporate voluntary arrangement.