Rule 1.53 of The Insolvency Rules 1986 - Company Voluntary Arrangements (CVAs) where a prior moratorium was obtained
Requisite Majorities of Members at a CVA meeting and proceedings to obtain agreement on the CVA proposal
At a meeting of the company members (shareholders) to consider a Company Volunary Arrangement (CVA) Proposal (where a previous moratorium was obtained) Insolvency Rule 1.53 obtains. Insolvency Rule 1.53 starts off by first saying that the entirety of Insolvency Rule 1.20 applies and then adds on a further list of extra requirements. The gist of the two Insolvency Rules is that,
- More than half in value of those shareholders voting must vote to approve the proposed CVA
- And other Rules concerning the procedure for adjournment.
The actual wording of Insolvency Rule 1.53 is reproduced below in bold.
The Insolvency Rules 1986 - Rule 1.53 - Requisite majorities (members) and proceedings to obtain agreement on the proposal (for those CVA cases where a prior moratorium was obtained)
(1) Rule 1.20 shall apply.
(2) If the chairman thinks fit, the creditors' meeting and the company meeting may be held together.
(3) The chairman may, and shall if it is so resolved at the meeting in question, adjourn that meeting, but any adjournment shall not be to a day which is more than 14 days after the date on which the moratorium (including any extension) ends.
(4) If the meetings are adjourned under paragraph (3), notice of the fact shall be given by the nominee [as soon as reasonably practicable] to the court.
(4A) Once only in the course of a meeting the chairman may, without an adjournment, declare it suspended for any period up to 1 hour.
(5) If following the final adjournment of the creditors' meeting the proposal (with or without modifications) has not been approved by the creditors, it is deemed rejected.
Shareholders have a vote on whether or not a proposed Company Voluntary Arrangement should be approved. Insolvency Rule 1.53 only applies to those few CVA cases were a prior moratorium (freeze) on creditors rights to take enforcement action was otained. In that circumstance the members (shareholders) also vote on the basis of value (normally on the basis of the number of their shares - but dependent any relevant provisions in the Articles of Association).