A Guide to Company Voluntary Arrangement

The Procedure

This procedure allows a financially troubled company to reach a binding agreement with its creditors about payment of all, or part of, its debts over an agreed period of time. A moratorium, which stops creditors taking enforcement action, can be applied for by applying to the Court but it is normally required.

When the arrangement has been proposed, a nominee (who must be an insolvency practitioner) reports to court on whether a meeting of creditors and shareholders should be held to consider the proposal.

The Proposal

RNF Business Advisory Limited will assist in the preparation of the company’s voluntary arrangement proposal and statement of affairs based upon information provided by you and by anybody who is authorised to provide such information on your behalf, which may include, for example, your accountant.

Once the proposal has been drafted it will be provided to you for approval. Should any amendments be needed we will make such changes as you direct, but with consideration to the matters required by the legislation and our licencing body. Full and accurate details of the company’s financial situation are imperative as a misstatement of the amount of the assets and liabilities can constitute a material irregularity. In addition it must be noted that a director of a company commits an offence if he makes a false representation or commits any other fraud for the purposes of obtaining the approval of the creditors to the proposed arrangement.

Once you are satisfied the proposal is finalised we will prepare all the necessary statutory documentation to allow you to formally lodge the CVA with the relevant county court. You will be asked to review this proposal and associated documentation and sign where appropriate. The proposal is a legally binding document and you should obtain independent legal advice before entering into the same should you be uncertain about any of its contents. Once the proposal has been signed, one or more of the insolvency practitioners at this firm may sign one of the statutory notices and consent to act in their capacity as nominee.

The role of the nominee

The nominee will then prepare their independent report commenting upon proposal. If at this time more information is needed, we will ask you for this as soon as possible to avoid any delay.

Once the nominee’s report has been completed it will be filed with the court stating a date on which the meeting of creditors will be held for the purposes of considering the company’s proposal. This date must be at least fourteen days from the date on which the nominee’s report is lodged in court.

Following the filing of the nominee’s report in court, notice of the meeting must be given by us to all creditors of the company of whose claim we are aware and includes both secured and unsecured creditors. Creditors will also receive a copy of the proposal, a copy of the nominee’s report, and other statutory documentation necessary to allow them to consider the proposal that they have received.

The creditors meeting

During the period up to the meeting the company’s creditors have the opportunity to consider the proposal and send in their vote on the proposal via a proxy form or attend the meeting and vote in person. The creditors may vote in one of three ways:

  1. Approve the proposal without modification;
  2. Reject the proposal;
  3. Approve the proposal but with modifications.

Should creditors put forward modifications you must decide whether or not to accept these. If you do not accept these it is likely that they will instruct the proxy holder to cast their vote as a rejection of the proposal, meaning the proposal may not be approved. If the proposal is not accepted additional time (up to fourteen days) may be given to allow you to reconsider the position or make any amendments to increase the chance of it being accepted.

If your proposal is accepted the nominee will then, subject to the approval of creditors, act as supervisor to put the proposal into practice. It is possible for an alternative insolvency practitioner to be appointed as supervisor, however this is uncommon. Should your proposal be rejected after the maximum 14 day period of adjournment the engagement will terminate, but please note that we may enter into a separate engagement in respect of an alternative insolvency procedure for the company, such as a Creditors Voluntary Liquidation or Administration.

The supervisor’s role and scope of his duties will be outlined in the proposal, however in broad terms the role of the supervisor is to ensure the agreed terms of the CVA are followed by all parties to it and that any breaches are acted upon accordingly.

As mentioned above, once the arrangement has been approved the supervisor will oversee its implementation and running. One of the terms that is required to be included will state what will happen in the event of a default in the terms of the arrangement, which will include most commonly where the company is unable to keep up the contributions. In most cases the terms of a voluntary arrangement will indicate that where a breach has occurred it will be necessary for the supervisor to issue a certificate of termination and seek to wind up the company by issuing a winding up petition in the court.

Working with you

We will work with you to explore your situation in detail and provide clear, jargon-free, honest advice. Rest assured, anything discussed with us remains confidential.

All initial consultations are free of charge and without obligation.

When you need help

Call Ruth on 01622 764 612
Call Filippa on 020 7253 7171

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Mr M. Referring Accountant

"Filippa's words of wisdom started me on a path of recovery and I will be forever indebted to her for her understanding and compassionate approach."

CEO from Devon

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Mr B IVA

"I would like to re-iterate my thanks to Ruth and her staff for putting my finances back on track, so efficiently and effectively. As a now retired person, I hesitate to imagine my financial outlook had you not successfully orchestrated my IVA."

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Peter Sargent & David White R3 (Association of Business Recovery Professionals)

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