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From the 1st January 2003 Directors of
a company that propose a new type of CVA can gain the benefit
of a freeze on all creditors actions - even before the creditors
have an opportunity to consider the proposal that is to be
made.
This freezing effect is brought about
by section 1 of the Insolvency Act 2000 - which section was
brought into force on the 1st January 2003.
The freezing period is also called the
period of the moratorium.
This breathing space enables the directors
to work with their accountants, or other advisors, to prepare
a plan for the future. This plan is then reflected in the
CVA proposal.
The plan might involve:
- monthly payments to creditors
over a period of months or years and/or
- a reduction in staff with the
redundancy entitlements being repaid to the government over
a period and/or
- the closure of an outlet.
and or/
- the dropping of a product
or service
- etc. etc.
This freeze on creditors actions
provides a real possibility of the governments intentions
to bring about a "rescue culture" being achievable
in many matters where, otherwise, a liquidation would have
been the end result.
But directors cannot have "power"
without "responsibility".
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