Purnells

	Two types of CVA
	what are the two types? why two types? who can apply for a new type of CVA? are their different rules? when would an old type CVA be used? when would a new type of CVA be used?
	Old type CVA - No Moratorium the limbo period nominees duties disclosure issues directors duties the proposal impact of proposal on various parties
	New type CVA - With Moratorium enormous power enormous responsibility disclosure issues impact of proposal nominees duties creditors meeting voting rights supervisors duties a typical proposal costs concluding the CVA banks and debenture holders landlords petitioning creditors preferential creditors unsecured creditors
	Table of differences table to show the differences between the two types of CVA?
	Administration Order v CVA when would administration be sought rather than take up a new type CVA?
	Case Studies case study 1 case study 2 case study 3

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What costs are involved in putting forward a new type CVA?

As there are many types of CVA the costs incurred can vary materially. However, a well drawn CVA proposal can define the sum of costs to be incurred within close parameters.

The costs and disbursements include:

Nominees Fees

Nominees fees will be greater in a new type CVA than in an old type CVA. The reason for this is that in a CVA with a moratorium the nominee has a responsibility to "monitor" in that moratorium period. The nominee's monitoring is in essence to ensure that the company has sufficient cash to operate in the moratorium period. In addition a nominee should "test check" that the directors are carrying out their duties.
- of disclosure and
- of not selling fixed assets.
The nominee has the additional duty of reporting to the court whether or not, in his opinion, the company has (at the start of the moratorium period) sufficient cash to operate until the date of the creditors meeting.

Nominees Disbursements

In a CVA with a moratorium the nominee has the duty (after the director's prime responsibility) of review to ensure that the company's assets are not dissipated. In consequence a nominee has to take out "bordereau" cover. That cover is insurance cover. It is cover which provides creditors with a safety net, should the nominee improperly deal with company assets.

Conclusion

You should always be able to get a quote of a set fixed sum for a nominee to carry out his duties. After a half day review an insolvency practitioner should be able to quote either a fixed fee or a fixed basis of charging.

The amount of the nominee fees is in addition always addressed in the CVA proposal - and the creditors can vote at the creditors meeting to vary the level of those fees if they do not provide value.