Rule 1.5 of The Insolvency Rules 1986 - Company Voluntary Arrangements (CVAs)

The Statement Of Affairs (& Statement of Truth) to be included in a CVA proposal

 

 

Previously we have noted from Rule 1.3 the required "content" of a Company Voluntary Arrangement proposal.  -  Rule 1.5 of The Insolvency Rules 1986 extends the disclosure requirement substantially under the heading "statement of affairs". The actual wording of Insolvency Rule 1.5 is set out below in bold.

 

While the Rule is headed "statement of affairs" a reading of the Rule reveals that much more is required to be disclosed than a statement of affairs.

 

Insolvency Rules 1986 - Rule 1.5 Statement of Affairs

 

(1) The directors shall, [at the same time as the] proposal is delivered to the nominee, deliver to him a statement of the company's affairs.

 

(2) The statement shall comprise the following particulars (supplementing or amplifying, so far as is necessary for clarifying the state of the company's affairs, those already given in the directors' proposal)—

(a) a list of the company's assets, divided into such categories as are appropriate for easy identification, with estimated values assigned to each category;

(b) in the case of any property on which a claim against the company is wholly or partly secured, particulars of the claim and its amount, and of how and when the security was created;

(c) the names and addresses of the company's preferential creditors (defined in section 4(7)), with the amounts of their respective claims;

(d) the names and addresses of the company's unsecured creditors, with the amounts of their respective claims;

(e) particulars of any debts owed by or to the company to or by persons connected with it;

(f) the names and addresses of the company's members, with details of their respective shareholdings;

(g) such other particulars (if any) as the nominee may in writing require to be furnished for the purposes of making his report to the court on 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 notice to the nominee under Rule 1.4. However, the nominee may allow an extension of that period to the nearest practicable date (not earlier than 2 months before the date of the notice under Rule 1.4); and if he does so, he shall give his reasons in his report to the court on the directors' proposal.

 

(4) The statement must be verified by a statement of truth made by at least one director. 

 

 

Rule 1.5 of The Insolvency Rules 1986 highlights the extent of the additional disclosure requirements in a CVA proposal and that the directors' must commit themselves to the accuracy of the disclosed information by signing a "statement of truth".