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

Schedule A1 - Insolvency Act 1986 - Paragraph 17 - Can a company obtain credit in a CVA moratorium period?





Paragraph 17 of Schedule A1 to The Insolvency Act 1986 provides that the Directors of a company must not take credit of more than £250 in the Company Voluntary Arrangement (CVA) moratorium period unless the organisation from whom the credit is to be taken has first been informed of the existence of the moratorium.




The actual wording of Paragraph 17 of Schedule A1 to The Insolvency Act 1986 is reproduced below in bold.


17. (1) The company may not obtain credit to the extent of £250 or more from a person who has not been informed that a moratorium is in force in relation to the company.

(2) The reference to the company obtaining credit includes the following cases—

(a) where goods are bailed (in Scotland, hired) to the company under a hire-purchase agreement, or agreed to be sold to the company under a conditional sale agreement, and

(b) where the company is paid in advance (whether in money or otherwise) for the supply of goods or services.

(3) Where the company obtains credit in contravention of sub-paragraph (1)—

(a) the company is liable to a fine, and

(b) if any officer of the company knowingly and wilfully authorised or permitted the contravention, he is liable to imprisonment or a fine, or both.

(4) The money sum specified in sub-paragraph (1) is subject to increase or reduction by order under section 417A in Part XV.



The purpose of Paragraph 17 to Schedule A1 to The Insolvency Act 1986 concerning Company Voluntary Arrangements is to protect the unwitting from giving credit to a company in a CVA moratorium period without knowing that that moratorium is in place.