Rule 1.37 of The Insolvency Rules 1986 - Company Voluntary Arrangements (CVAs) with a moratorium
The requirements regarding the Statement Of Affairs
In the lead up stages to applying for a Company Voluntary Arrangement (CVA) with a moratorium (freeze on crediors enforcement actions before the creditors meeting) it is important that there is a truthful statement of affairs as to the company's assets and liabilities. Rule 1.37 of The Insolvency Rules 1986 details the legal requirements as to,
- the legally required content of the statement of affairs (A statement of affairs is, in essence, a listing of the assets and liabilities of the company concerned)
- the fact that the statement of affairs must be made up to a recent date.
- the fact that at least one of the company dorectors must sign to verify the truthfulness of the content of the statement of the affairs.
The actual wording of Rule 1.37 of The Insolvency Rules 1986 is reproduced below in bold.
Insolvency Rules 1986 - Rule 1.37 - Statement of Affairs
(1) The statement of the company's affairs required to be delivered to the nominee pursuant to paragraph 6(1)(b) of Schedule A1 to the Act shall be delivered to the nominee at the same time as the delivery to him of the document setting out the terms of the proposed voluntary arrangement.
(2) The statement of affairs shall comprise the same particulars as required by Rule 1.5(2) (supplementing or amplifying, so far as is necessary for clarifying the state of the company's affairs, those already given in the directors' proposal).
(3) The statement of affairs shall be made up to a date not earlier than 2 weeks before the date of the delivery of the document containing the proposal for the voluntary arrangement to the nominee under Rule 1.36(1).
However, the nominee may allow an extension of that period to the nearest practicable date (not earlier than 2 months before the date of delivery of the documents referred to in Rule 1.36(1)) and if he does so, he shall give a statement of his reasons in writing to the directors.
(4) The statement of affairs must be verified by a statement of truth made by at least one director.
Insolvency Rules 1986 - Rule 1.37 is designed to require that the statement of affairs must contain legally specified content and be relatively up to date and be signed off by a director of the company concerned as being truthful (when applying for a CVA with a moratorium.)