The Extension of Small Company Voluntary Arrangements: A Response to the Conservative Party's Corporate Restructuring Proposals
INSOLVENCY LAW: ISSUES, THEMES AND PERSPECTIVES, P. Omar, ed., Ashgate Publishing, Forthcoming
31 Pages Posted: 16 Jan 2009 Last revised: 6 Feb 2009
Date Written: January 15, 2009
In a recent article I highlighted the background, growth and possible use of Company Voluntary Arrangements (CVAs) in the corporate restructuring sphere. In particular I argued that consensual Part 1 Insolvency Act 1986 CVAs, i.e. CVAs without moratoriums and used outside administration, could provide a low cost effective restructuring tool. In this essay I argue in the alternative that the small CVA provisions as introduced by the Insolvency Act 2000 and now represented in Schedule A1 of the Insolvency Act 1986 could be extended to large companies (i.e. those outside s.247 Companies Act 1985 or s.382 Companies Act 2006) so as to allow large company restructuring with the benefit of a moratorium without the costs associated with an accompanying Administration Order being in place. In so doing I go someway to respond to the Conservative Party's recent call for the adoption of Chapter 11 type automatic stays into English law. It is argued that instead of adopting a new form of business restructuring tool as advocated by the Conservative Party, which is largely reminiscent of the Irish Examinership model, we should instead extend the small CVA provisions (Schedule A1 Insolvency Act 1986) to larger companies therefore reducing associated reform costs as well as benefiting from a reduction in associated Administration Order costs.
Keywords: company voluntary arrangements, insolvency, cva, restructuring, debt, debtor, creditor, reorganisation, schemes of arrangement, conservative party, law reform proposals, alternative
JEL Classification: K00
Suggested Citation: Suggested Citation