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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Those who may propose an arrangement are:

1. The director(s) of a company may make a proposal that sets out "the deal" being offered to creditors.

At this stage there is a "nominee" who acts in relation to the arrangement. If the arrangement is accepted this person will become the supervisor of the arrangement. A nominee must be a person who is qualified to act as an insolvency practitioner in relation to the company.

2. A proposal could also be made:-

where an administration order is in force in relation to the company, by the administrator, and

where the company is being wound up, by the liquidator.

The contents of a proposal are set out in Rule 1.3 of the Insolvency Rules 1986. Click here if you would like to read that rule in its entirety.

The deal offered to creditors under the proposal must be better than the alternative of liquidation. Otherwise why would creditors vote for the approval of a CVA?

For this reason a CVA proposal often includes an estimated outcome statement, which contrasts the return to creditors under the CVA as compared with the lesser return, they could expect in liquidation.