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01 July 2014

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Corporate Voluntary Arrangement

Corporate Voluntary Arrangement

A corporate voluntary arrangement is when a company makes an agreement with its creditors by proposing a 'composition in satisfaction of its debt' or a 'scheme of arrangement of its affairs'. This means an arrangement, approved by the court, in which the company has formally agreed terms with its creditors for the settlement of its debts.

2. Who may propose a corporate voluntary arrangement?

A corporate voluntary arrangement may be proposed by:

  • the administrator, if there is an administration order;
  • the liquidator, if the company is being wound up; or
  • the directors, in other circumstances.

3. Who considers the proposal?

When the directors have proposed the arrangement, the nominee appointed to supervise its implementation reports to the court within 28 days on whether, in his or her opinion, meetings of the company and of its creditors should be called.

4. How is a proposed corporate voluntary arrangement approved?

The meetings summoned by the nominee decide whether to approve the arrangement which, subject to certain restrictions, may be approved with or without modifications. It is then binding on all creditors who had notice of the meeting and were entitled to vote. All creditors who had notice of the meeting are bound by the terms of the arrangement.

5. What happens when the corporate voluntary arrangement is approved?

If the meetings of members and creditors approve the arrangement, then the nominee or his replacement becomes the supervisor of the arrangement.

6. What needs to be sent to Companies House?

The supervisor must send a copy of the chairman's report of the meeting.

At least once every 12 months, the supervisor must send a report on the progress and prospects for the full implementation of the voluntary arrangement, to all interested parties including the Registrar. When the arrangement is completed, the supervisor must notify the Registrar within 28 days after final completion or termination of the voluntary arrangement.

If the arrangement is suspended or revoked, the Registrar must be notified.

Following the implementation of the Insolvency (Amendment) Rules 2010, which came into force on 6 April 2010, Companies House will prescribe the following Insolvency forms within Registrar's Rules for the first time. The forms listed below are to be filed with the Registrar, for all corporate voluntary arrangements. For any arrangement that started on or before 5 April 2010 these forms are to be used with appropriate amendments (if required):

 

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