Company Voluntary Arrangements (CVAs) - Notification to Nominee of commencement of CVA with a moratorium
Schedule A1 - Insolvency Act 1986 - Paragraph 9 - Notification of beginning of moratorium
As the insolvency practitioner (called the "nominee") has to monitor a company's activities during the moratorium period it is obvious that there must be a legal provision that compels the directors to immediately notify the nominee that the court has granted the CVA freeze on creditors and ring fenced the company from financial pressures. It is only when the nominee is notified of when the CVA freeze begins that he can start to then monitor the company's activities. The necessary law is found in Paragraph 9 of Schedule A1 to The Insolvency Act 1986.
The actual wording of Paragraph 9 of Schedule A1 to The Insolvency Act 1986 is reproduced below in bold.
(1) When a moratorium comes into force, the directors shall notify the nominee of that fact forthwith.
(2) If the directors without reasonable excuse, fail to comply with sub-paragraph (1), each of them is liable to imprisonment or a fine, or both.
In simple language the directors have to immediately tell the Nominee when the CVA moratorium begins, so as to satisfy the requirements on them set out at Paragraph 9 of Schedule A1.