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

Schedule A1 - Insolvency Act 1986 - Paragraph 4D - Interpretation of capital market arrangement

 

 

The sequence of "Paragraphs" from Paragraph 4A to 4K of Schedule A1 of The insolvency Act 1986 concern the definition of what types of company are ineligible to apply for a Company Voluntary Arrangement (CVA) with a moratorium. In particular Paragraph 4D provides the definition of the phrase "capital market arrangements" (for the purposes of Paragraph 4A)

 

The actual wording of Paragraph 4D to Schedule A1 of The Insolvency Act 1986 is reproduced below in bold.

 

 

Paragraph 4D - Schedule A1 - Insolvency Act 1986 - "Interpretation of capital market arrangement"

 

(1) For the purposes of paragraph 4A an arrangement is a capital market arrangement if—

(a) it involves a grant of security to a person holding it as trustee for a person who holds a capital market investment issued by a party to the arrangement, or

(b) at least one party guarantees the performance of obligations of another party, or

(c) at least one party provides security in respect of the performance of obligations of another party, or

(d) the arrangement involves an investment of a kind described in articles 83 to 85 of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (S.I. 2001/544) (options, futures and contracts for differences).

(2) For the purposes of sub-paragraph (1)—

(a) a reference to holding as trustee includes a reference to holding as nominee or agent,

(b) a reference to holding for a person who holds a capital market investment includes a reference to holding for a number of persons at least one of whom holds a capital market investment, and

(c) a person holds a capital market investment if he has a legal or beneficial interest in it.

(3) In paragraph 4A, 4C, 4J and this paragraph—

“agreement” includes an agreement or undertaking effected by—

(a) contract,

(b) deed, or

(c) any other instrument intended to have effect in accordance with the law of England and Wales, Scotland or another jurisdiction, and

“party” to an arrangement includes a party to an agreement which—

(a) forms part of the arrangement,

(b) provides for the raising of finance as part of the arrangement, or

(c) is necessary for the purposes of implementing the arrangement.

 

 

Clearly this area of insolvency law is complex insofar as there are multiple cross references to other law. For an intelligible plain english response to any questions you might have about protecting your company please contact us for free advice. The main gist of Paragraph 4D of Schedule A1 of The Insolvency Act 1986 is to stop certain companies involved in "capital market arrangements" from being eligible to enter into a CVA with a moratorium.