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

Schedule A1 - Insolvency Act 1986 - Paragraph 44 - CVAs and the Financial Services Authority

 

 

 

Some companies have to be registered with and then become regulated by The Financial Services Authority (FSA). If such a company becomes subject to financial difficulty and the directors wish to propose a Company Voluntary Arrangement (CVA) with a prior moratorium period the law prescribes that the FSA must be notified and the FSA may become fully involved. The law dealing with the interactions of the FSA and any Company Voluntary Arrangement is set out in Paragraph 44 of Schedule A1 to The Insolvency Act 1986.

 

 

 

The actual wording of Paragraph 44 of Schedule A1 to The Insolvency Act 1986 is reproduced below in bold.

 

 

Paragraph 44 - Schedule A1- Insolvency Act 1986 - Company Voluntary Arrangements and the Financial Services Authority

 

(1) This Schedule has effect in relation to a moratorium for a regulated company with the modifications in sub-paragraphs (2) to (16) below.

(2) Any notice or other document required by virtue of this Schedule to be sent to a creditor of a regulated company must also be sent to the Authority.

(3) The Authority is entitled to be heard on any application to the court for leave under paragraph 20(2) or 20(3) (disposal of charged property, etc.).

(4) Where paragraph 26(1) (challenge of nominee’s actions, etc.) applies, the persons who may apply to the court include the Authority.

(5) If a person other than the Authority applies to the court under that paragraph, the Authority is entitled to be heard on the application.

(6) Where paragraph 27(1) (challenge of nominee’s actions, etc.) applies, the persons who may apply to the court include the Authority.

(7) If a person other than the Authority applies to the court under that paragraph, the Authority is entitled to be heard on the application.

(8) The persons to be summoned to a creditors’ meeting under paragraph 29 include the Authority.

(9) A person appointed for the purpose by the Authority is entitled to attend and participate in (but not to vote at)—

(a) any creditors’ meeting summoned under that paragraph,

(b) any meeting of a committee established under paragraph 35 (moratorium committee).

(10) The Authority is entitled to be heard on any application under paragraph 36(3) (effectiveness of decisions).

(11) Where paragraph 38(1) (challenge of decisions) applies, the persons who may apply to the court include the Authority.

(12) If a person other than the Authority applies to the court under that paragraph, the Authority is entitled to be heard on the application.

(13) Where paragraph 39(3) (implementation of voluntary arrangement) applies, the persons who may apply to the court include the Authority.

(14) If a person other than the Authority applies to the court under that paragraph, the Authority is entitled to be heard on the application.

(15) Where paragraph 40(2) (challenge of directors’ actions) applies, the persons who may apply to the court include the Authority.

(16) If a person other than the Authority applies to the court under that paragraph, the Authority is entitled to be heard on the application.

(17) This paragraph does not prejudice any right the Authority has (apart from this paragraph) as a creditor of a regulated company.

(18) In this paragraph—

  • “the Authority” means the Financial Services Authority, and

  • “regulated company” means a company which—

    (a)

    is, or has been, an authorised person within the meaning given by section 31 of the Financial Services and Markets Act 2000,

    (b)

    is, or has been, an appointed representative within the meaning given by section 39 of that Act, or

    (c)

    is carrying on, or has carried on, a regulated activity, within the meaning given by section 22 of that Act, in contravention of the general prohibition within the meaning given by section 19 of that Act.




    The FSA is able to involve itself fully in Company Voluntary Arrangement CVA proceedings be those proceedings, for example, be to,

    - Challenge directors actions, or

    - Challenge the actions of the Nominee