Company Voluntary Arrangements (CVAs) - Law - CVA with a moratorium
Sch A1 - Insol Act 1986 - Para 22 - Directors - Moratorium period - Fined - If they sell secured property & no consent
The insolvency law set out in Paragraph 22 of Schedule A1 to The Insolvency Act 1986 indicates that the directors of a company who sell secured property without consent can be punished. The punishment of the direcors can be by way of imprisonment or fine.
The actual wording of Paragraph 22 of Schedule A1 to The Insolvency Act 1986 is reproduced below in bold.
22. (1) If the company --
(a) without any consent or leave under paragraph 20, disposes of any of its property which is subject to a security otherwise than in accordance with the terms of the security,
(b) without any consent or leave under paragraph 20, disposes of any goods in the possession of the company under a hire-purchase agreement otherwise than in accordance with the terms of the agreement, or
it is liable to a fine.
(2) If any officer of the company, without reasonable excuse, authorises or permits any such disposal or failure to comply, he is liable to imprisonment or a fine, or both.
The purpose of Paragraph 22 of Schedule A1 to The Insolvency Act 1986 is to ensure that drectors of a company subject to a Company Voluntary Arrangemment (CVA) do not abuse their positions by selling assets which are charged to lenders without first obtaining consent of those lenders or permission from the court. Directors who fail in their duty may be punished by imprisonment or fine.