What can the public learn when a Company Voluntary Arrangement is proposed?

As indicated earlier on this website when the older type of Company Voluntary Arrangement Proposal (CVA) is used then when that company is in the "limbo period" up to the day of the creditors meeting to consider the proposal there is no protection against creditors commencing or continuing enforcement actions against the company assets. This type of Company Voluntary Arrangement proposal is one under Section 1 of The Insolvency Act 1986.

By contrast if the Company Voluntary Arrangement was proposed under Section 1A of The Insolvency Act 1986 then a freeze, or moratorium, on any enforcement action by creditors is obtained.

Because there is no such protection in a Section 1 Insolvency Act 1986 arrangement there is no requirement on the company to be involved in a number of disclosure steps that otherwise would be necessary.

In other words in the procedure for an older type of Company Voluntary Arrangement (CVA) there are no requirements to:

• advertise the existence of the proposed company voluntary arrangement in the London Gazette or local newspapers
• lodge any paperwork about the Company Voluntary Arrangement with the Registrar of Companies
• record on company letterheads, invoices, orders etc that a CVA has been proposed

From the above it can be seen that the public or third parties would possibly not become aware of an older type of Company Voluntary Arrangement (CVA) having been proposed because of there being no advertisement requirement.

If you wish to weigh the pros and cons of using a Section 1 (no freeze) or a Section 1A (freeze obtained) Insolvency Act 1986 Company Voluntary Arrangement proposal then contact us for a FREE INITIAL MEETING.