Company Voluntary Arrangements (CVAs) - CVA with a moratorium - Ineligible companies
Insolvency Act 1986 - Schedule A1 - Paragraph 4J - Definition of "Step-in rights"
Paragraph 4J of Schedule A1 provides the legal definition of the phrase "step in rights". The whole sequence of Paragraphs from 4A to 4K of that Schedule to The Insolvency Act 1986 are concerned to identify what businesses are not permitted by law (ineligibility) to apply for a Company Voluntary Arrangement (CVA) with a moratorium.
The actual wording of Paragraph 4J of Schedule A1 to The Insolvency Act 1986 is reproduced below in bold.
Paragraph 4J - Schedule A1 - Insolvency Act 1986 - Step in Rights
(1) For the purposes of paragraph 4B a project has “step-in rights” if a person who provides finance in connection with the project has a conditional entitlement under an agreement to—
(i) assume sole or principal responsibility under an agreement for carrying out all or part of the project, or
(ii) make arrangements for carrying out all or part of the project.
(2) In sub-paragraph (1) a reference to the provision of finance includes a reference to the provision of an indemnity.
The main effect of Paragraph 4J when read in the light of that provided by Paragraph 4B of Schedule A1 to The Insolvency Act 1986 is that a company is ineligible to put forward (propose) a Company Voluntary Arrangement with a moratorium if,
- the company concerned has a project which is a private-public project, and
- if the financier of the project can "step in" in certain conditional circumatances should the project go financially wrong
All of this is a bit technical - if you want free advice, in plain English, particularised to address your company's particular circumstances we are pleased to assist - just contact us.