Benefits to unsecured creditors arising from a Company Voluntary Arrangement (CVA) with a moratorium
Unsecured creditors as a whole indirectly benefit under the new Company Voluntary Arrangement (CVA) process as in the period leading up to the creditors meeting
- Debenture holders are prevented from appointing an Administrative Receiver
- Landlords cannot distrain or take peaceable re-entry.
- Finance Companies cannot re-possess their goods
- A winding up petition cannot be issued.
- Existing winding up petitions cannot be taken forward to the making of a winding up order.
All of these restrictions result from the government's aim of their being a "rescue culture" as being more likely to happen if all creditors can vote on the future of a company under a Company Voluntary Arrangement rather than that future be derailed by one of the classes of creditors listed above.
In future "creditors as a group" will in many cases determine what is to happen to the future of a company suffering financial distress rather than the life of that company being prematurely brought to an end by the action of any individual creditor.
For advice on how your company can be rescued from enforcement actions of landlords, banks, finance companies and protected from statutory demands, winding up petitions and winding up orders issued by unsecured creditors consider proposing a Company Voluntary Arrangement.