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

Companies that cannot obtain a CVA with a moratorium - Paragraph 4 - Schedule A1 - Insolvency Act 1986

 

 

Paragraph 4 of Schedule A1 to The Insolvency Act 1986 prescribes a list of companies that are not eligible to apply for a Company Voluntary Arrangement (CVA) with a moratorium (freeze on creditors enforcement actions prior to the creditors meeting) because of their circumstances.

 

The main thrust of this Paragraph of Schedule A1 is that if a company is already in some form of insolvency process then a moratorium is not needed as creditors enforcement actions are already frozen. Paragraph 4 of Schedule A1 is shown below in bold.

 

 

 

Paragraph 4 - Schedule A1 - Insolvency Act 1986 - Companies excluded from applying for a CVA with a moratorium

 

 

(1) A company is excluded from being eligible for a moratorium if, on the date of filing—

[(a) the company is in administration,]

(b) the company is being wound up,

(c) there is an administrative receiver of the company,

(d) a voluntary arrangement has effect in relation to the company,

(e) there is a provisional liquidator of the company,

(f) a moratorium has been in force for the company at any time during the period of 12 months ending  with the date of filing and—

(i) no voluntary arrangement had effect at the time at which the moratorium came to an end, or

(ii) a voluntary arrangement which had effect at any time in that period has come to an end  prematurely, or

[(fa) an administrator appointed under paragraph 22 of Schedule B1 has held office in the period of 12 months ending with the date of filing,]

(g) a voluntary arrangement in relation to the company which had effect in pursuance of a proposal  under section 1(3) has come to an end prematurely and, during the period of 12 months ending with the  date of filing, an order under section 5(3)(a) has been made.

(2) Sub-paragraph (1)(b) does not apply to a company which, by reason of a winding-up order made after the date of filing, is treated as being wound up on that date.

 

 

In other words if a company is already in an insolvency process it cannot apply for a CVA with a moratorium - Paragraph 4 Schedule A1 Insolvency Act 1986.