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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A nominee has greater responsibilities than under an old type CVA.

As well as "reporting" to the court and to the creditors his opinion that the proposed voluntary arrangement has a reasonable chance of being approved and implemented the nominee also has to investigate the forecast cash flow of the company in the moratorium period. This pre-requisite is caused by the Rule that a nominee must check that:

"a company is likely to have sufficient funds during the moratorium to enable it to carry on its business".

This is an important extra duty of the nominee - particularly when many businesses will need to trade "cash with order" during the moratorium period.

While the moratorium continues the nominee must keep a watchful eye on developments. The nominee must withdraw his consent to act if:

the directors fail to provide him with any information he requests.
he forms the opinion that the proposed arrangement no longer has a reasonable prospect of being approved and implemented or that the company will not have sufficient funds to enable it to carry on in business.

This eventuality could arise for instance if at the commencement of the moratorium it was considered that the company could raise finance from say:

factors
or asset lenders

But part way through the moratorium no such offers of finance were obtained. In those circumstances the moratorium comes to an end and the nominees must advise the court, and the creditors and advertise the ending of the the moratorium.

Because of the fact that the nominee has greater duties it has been provided by the Insolvency Act that the nominee must obtain a "bond" for the moratorium period. The costs of this bond will fall on the company.