Rule 1.10 of The Insolvency Rules 1986 - Company Voluntary Arrangements (CVAs)

Preparation of a CVA Proposal (By the Administrator or Liquidator)



Rules 1.10 and 1.11 of The Insolvency Rules 1986 address the legal requirements where the Company Voluntary Arrangement (CVA) proposal is put forward by the Administrator or Liquidator of a company (as opposed to the directors of a company). In other words the company subject of the intended CVA proposal is already under an existing insolvency process - liquidation or administration.


Insolvency Rule 1.10 sets out the additional responsibilities of the administrator or liquidator as to the further information that must be given to creditors - particularly the amount of the preferential creditors in the administration or liquidation and an estimate of the prescribed part.


The actual wording of Insolvency Rule 1.10 is shown below in bold


Insolvency Rules 1986 - Rule 1.10 - Preparation of proposal (By administrator or liquidator)


(1) The responsible insolvency practitioner's proposal shall specify all such matters as under Rule 1.3 (subject to Rule (3) below) in Chapter 2 the directors of the company would be required to include in a proposal by them, with the addition, where the company is in Administration or Liquidation, of the nature and amount of its preferential creditors.


(2) Where the company is being wound up by the court, the insolvency practitioner shall give notice of the proposal to the official receiver.


(3) The administrator or liquidator shall include, in place of the estimate required by Rule 1.3 (2) (ca), a statement which contains - 

(a) to the best of the administrator or liquidator's knowledge and belief -

(i) an estimate of the value of the prescribed part (whether or not he proposes to make an application to the court under section 176A (5) or section 176A (3) applies), and 

(ii) an estimate of the value of the company's net property, and


(b) whether, and, if so, why the administrator or liquidator proposes to make an application to court under section 176A (5).


(4) Nothing in this Rule is to be taken as requiring any such estimate to include any information, the disclosure of which could seriously prejudice the commercial interests of the company. If such information is excluded from the calculation the estimate shall be accompanied by a statement to that effect. 



Should an administrator or liquidator of a company decide to propose a CVA to creditors then that person is required by Insolvency Rule 1.10 to provide more information to creditors and shareholders than would have been the case if it were the directors of a company (not in any insolvency process) who were putting forward a Company Voluntary Arrangement proposal.