Rule 1.4 of The Insolvency Rules 1986 - Company Voluntary Arrangements (CVAs)

Notice to intended Nominee

 

 

A "nominee" in relation to a Company Voluntary Arrangement is a LIcensed Insolvency Practitioner. That practitioner has to report to the Court and to the creditors on the proposal. Clearly the nominee has to be given "notice" that a particular CVA proposal exists. Rule 1.3 of The Insolvency Rules 1986 prescribes how that notice is given to the particular nominee.

 

In practice the nominee is instructed by the directors at a much earlier stage. It is most often the nominee who actually drafts the CVA proposal for the directors' consideration.

 

Rule 1.4 Insolvency Rules 1986 - Notice to intended nominee (when the proposal is that of the directors)

 

(1) The directors shall give to the intended nominee written notice of their proposal.

 

(2) The notice, accompanied by a copy of the proposal, shall be delivered either to the nominee himself, or to a person authorised to take delivery of documents on his behalf.

 

(3) If the intended nominee agrees to act, he shall cause a copy of the notice to be endorsed to the effect that it has been received by him on a specified date; and the period of 28 days referred to in section 2(2) then runs from that date.

 

(4) The copy of the notice so endorsed shall be returned by the nominee forthwith to the directors at an address specified by them in the notice for that purpose

 

The cross reference in this insolvency rule 1.4 is to Section 2 (2) of The Insolvency Act 1986. That sub section of the Act states,

 

"The nominee shall, within 28 days (or such longer period as the court may allow) after he is given notice of the proposal for a voluntary arrangement, submit a report to the court stating -

(a) whether in his opinion, the proposed voluntary arrangement has a reasonable prospect of being approved and implemented,

(aa) whether, in his opinion, meetings of the company and its creditors should be summoned to consider the proposal, and 

(b) if in his opinion such meetings should be summoned, the date on which, and time and place at which, he proposes the meetings should be held."

 

 

In other words the Rule 1.4 "notice" to the nominee is the trigger to set the clock running as to when the nominee must complete his three specific reporting duties, set out above.