Company Voluntary Arrangements (CVAs) - Law - Ineligibility to apply for a CVA with a moratorium

Schedule A1 - Insolvency Act 1986 - Paragraph 4A - "Capital Market arrangements"


Paragraph 4A of Schedule A1 to The Insolvency Act 1986 defines a further category of company that is ineligible to apply for a Company Voluntary Arrangement (CVA) with a moratorium.


Those ineligible companies are those that have entered into what is called a "Capital Market Arrangement". The definition is complex but such Capital Market Arrangements include companies that have:

- issued certain types of bond or commercial paper of substantial value, or

- issued guarantees or security in relation to Capital Market Investments of substantial value.



The actual wording of Section 4A of Schedule A1 to The Insolvency Ac 1986 is reproduced below in bold.


Section 4A Schedule A1 Insolvency Act 1986 - Capital Market Arrangements


A company is also excluded from being eligible for a (CVA with a) moratorium if, on the date of filing (of the proposal with the court) , it is a party to an agreement which is or forms part of a capital market arrangement under which—

(i) a party has incurred, or when the agreement was entered into was expected to incur, a debt of at least £10 million under the arrangement, and

(ii) the arrangement involves the issue of a capital market investment.



Companies that have entered into Capital Market Arrangements cannot enter into a Company Voluntary Arrangement (CVA)  with a moratorium because of the provisions of Paragraph 4A of Schedule A1 to The Insolvency Act 1986. Instead the insolvency vehicle available to such companies is an Administration. As this area of law is complex if you wish to have free advice on the topic please contact us and we will be pleased to assist.