Company Voluntary Arrangements (CVAs) - Law - CVA with a moratorium

Schedule A1 - Insolvency Act 1986 - Paragraph 15 - What is the Effect on the company of a CVA moratorium?




Obtaining a moratorium (freeze) on creditors enforcement actions by a company for the period leading up to a Company Voluntary Arrangement (CVA) creditors' meeting is regarded as a legal privilege. For that privilege Schedule A1 to The Insolvency Act 1986 in turn makes various requirements on the company concerned. Paragraph 15 of that Schedule makes it law that even if a company contravenes the requirements on it (under Paragraphs 16 to 23) the transactions thereby undertaken are not invalid. This is so as there is no reason why a company should benefit from failing to comply with the law.





The actual wording of Paragraph 15 of Schedule A1 to The Insolvency Act 1986 is reproduced below in bold.



15. (1) Paragraphs 16 to 23 apply in relation to a company for which a moratorium is in force.

(2) The fact that a company enters into a transaction in contravention of any of paragraphs 16 to 22 does not—

(a) make the transaction void, or

(b) make it to any extent unenforceable against the company.