Company Voluntary Arrangements (CVAs) - Law - CVA with a moratorium
Schedule A1 - Insolvency Act 1986 - Paragraph 4E - Capital Market Investments
Paragraph 4E of Schedule A1 to the Insolvency Act 1986 concerns deeper definitions of the wording used to make certain companies ineligible to apply for a Company Voluntary Arrangement with a moratorium. In particular Paragraph 4E provides a particularly complex definition of the phrase "Capital Market Investments" when ineligibility for a CVA with a moratorium is the main issue.
For free advice in relation to your company and to determine the correct choice of insolvency vehicle please contact us. We will advise in plain english & not in the gobbledygook shown below.
The actual wording of Paragraph 4E to Schedule A1 of The Insolvency Act 1986 is reproduced below in bold.
Paragraph 4E - Schedule A1 - Insolvency Act 1986 - Capital Market Investment
(1) For the purposes of paragraphs 4A and 4D, an investment is a capital market investment if—
(a) it is within article 77 of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 (S.I.2001/544) (debt instruments) and
(b) it is rated, listed or traded or designed to be rated, listed or traded.
(2) In sub-paragraph (1)—
“listed” means admitted to the official list within the meaning given by section 103(1) of the Financial Services and Markets Act 2000 (c. 8) (interpretation),
“rated” means rated for the purposes of investment by an internationally recognised rating agency,
“traded” means admitted to trading on a market established under the rules of a recognised investment exchange or on a foreign market.
(3) In sub-paragraph (2)—
“foreign market” has the same meaning as “relevant market” in article 67(2) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2001 (S.I. 2001/1335) (foreign markets),
“recognised investment exchange” has the meaning given by section 285 of the Financial Services and Markets Act 2000 (recognised investment exchange)
The main gist of the above legal provision is that Paragraph 4E of Schedule A1 to The Insolvency Act 1986 defines a "Capital Market Investment" as one which, in the main, is a listed, traded or rated instrument. Companies involved in such activities cannot propose a Company Voluntary Arrangement (CVA) with a moratorium.