Rule 1.36 of The Insolvency Rules 1986 - Company Voluntary Arrangements (CVAs)

Delivery of Documents to the Intended Nominee etc - CVAs with a moratorium


When a Company Voluntary Arrangement (CVA) with a moratorium is proposed then Rule 1.36 of The Insolvency Rules 1986 prescribes that the proposal documents (defined in Paragraph 6 of Schedule A1 to The Insolvency Act 1986) must be delivered to the nominee by the directors of the company..


The idea behoind this is that,


- It is the directors who, by law, prepare the CVA proposal and who want to apply for the benefit of a freeze (moratorium) on creditors' enforcement actions


- The directors must then deliver the CVA proposal documents to the Nominee


- And the nominee then has to express his opinion whether or not the CVA has a reasonable prospect of being agreed by the creditors.


- In other words the moratorium (freeze on creditors enforcement actions) cannot start until the nominee has first considered the documents delivered to hime by the directors and second has submitted those documents to the court.


The actual wording of Rule 1.36 of The Insolvency Rules 1986 is reproduced below in bold.


Rule 1.36 Insolvency Rules 1986 - Delivery of documents to the intended nominee etc


(1) The documents required to be delivered to the nominee pursuant to paragraph 6(1) of Schedule A1 to the Act shall be delivered to the nominee himself or to a person authorised to take delivery of documents on his behalf.

(2) On receipt of the documents, the nominee shall [as soon as reasonably practicable] issue an acknowledgement of receipt of the documents to the directors which shall indicate the date on which the documents were received.


Insolvency Rule 1.36 shows the precise detail which the Rules prescribe for the process of passing the CVA documents (called "delivery") between the directors and the nominee in the lead up stages to obtaining a freeze (moratorium) on creditors enforcement actions. The Rules are detailed as the obtaining of a freeze on creditors actions is certainly regarded as a privilege and to obtain that privilege "the Rules have to be followed"!