Section 7 of The Insolvency Act 1986 - Company Voluntary Arrangements (CVAs)
Implementing the CVA - The Supervisor - Powers, directions, challenges - Move from CVA to Administration
Section 7 of The Insolvency Act 1986 not only defines who is the Supervisor of the Company Voluntary Arrangement but also how the supervisor('s),
- decisions might be challenged in court, and
- can himself obtain help from the court on questions of interpretation by seeking "court directions", and
Section 7 goes on to give the Supervisor power to either apply for the winding up of the company subject to a CVA or for the placing of the company in a CVA into administration. This shows the interplay between the several insolvency vehicles and how a company might move from one to another (for instance from a CVA into an administration).
The actual wording of Section 7 of The Insolvency Act 1986 is shown below in bold.
7. Implementation of proposal
(1) This section applies where a voluntary arrangement [has effect under section 4A].
(2) The person who is for the time being carrying out in relation to the voluntary arrangement the functions conferred—
[(a) on the nominee by virtue of the approval given at one or both of the meetings summoned under section 3]
(b) by virtue of section 2(4) or 4(2) on a person other than the nominee,
shall be known as the supervisor of the voluntary arrangement.
(3) If any of the company’s creditors or any other person is dissatisfied by any act, omission or decision of the supervisor, he may apply to the court; and on the application the court may—
(a) confirm, reverse or modify any act or decision of the supervisor,
(b) give him directions, or
(c) make such other order as it thinks fit.
(4) The supervisor—
(a) may apply to the court for directions in relation to any particular matter arising under the voluntary arrangement, and
(b) is included among the persons who may apply to the court for the winding up of the company or for an administration order to be made in relation to it.
(5) The court may, whenever—
(a) it is expedient to appoint a person to carry out the functions of the supervisor, and
(b) it is inexpedient, difficult or impracticable for an appointment to be made without the assistance of the court,
make an order appointing a person who is qualified to act as an insolvency practitioner [or authorised to act as supervisor, in relation to the voluntary arrangement], either in substitution for the existing supervisor or to fill a vacancy.
(6) The power conferred by subsection (5) is exercisable so as to increase the number of persons exercising the functions of supervisor or, where there is more than one person exercising those functions, so as to replace one or more of those persons.
While in the Insolvency Act 1986 Section 7 is headed "Implementation of the proposal" the actual wording of the Section shows that it goes much further than that ... it also allows the Supervisor of the Company Voluntary Arrangement (CVA) to move the company into Administration or Liquidation if appropriate.