Company Voluntary Arrangements. Geoffrey M. Weisgard

Transcription

1 Company Voluntary Arrangements Geoffrey M. Weisgard J O R D A N S 2003

2 CONTENTS Préface Table of Cases Table of Statutes Table of Statutory Instruments and Other Materials Table of European Législation Table of Irish Législation Table of Other Législation Table of Abbreviations v xi xxi xxix xxxix xli xliii xlv 1 INTRODUCTION 1 Introduction and background 1 The nature of a CVA 2 A deal between a company and its creditors 2 A composition or scheme of arrangement 2 The contractual nature of a CVA 3 A minimum return to creditors 3 Proposai by persons other than the directors 4 Sources of information 4 Lack of popularity 5 Precursors to the modem CVA 5 Trends in relation to CVAs 6 Reasons for the CVA's lack of popularity 6 The moratorium 9 Alternative methods of corporate rescue 12 The rescue culture 12 Arrangement under the Companies Act 1985, s The turn-around procédure 13 Receivership 13 Administration 14 Insolvency Act 2000: summary 16 The voluntary arrangement procédure: summary 17 Qualifications of the supervisor 20 Management of a company in voluntary arrangement 22 The provision of funding 24 Involvement of the Officiai Receiver 25 Involvement of the court 26 Involvement of the members 29

3 viii Company Voluntary Arrangements 2 THE PROCEDURE 31 Preliminary 31 The proposai 32 The directors' meeting 33 The moratorium 34 Meetings of members and creditors 40 Implementation 43 Default 44 3 THE NOMINEE AND HIS REPORT 45 The rôle of the nominee 45 The nominee's report 46 4 COSTS 51 Introduction 51 The Ferris Report 53 Further guidance 54 5 THE PROPOSAI. 57 Generally 57 Background and history 58 Assets 59 Liabilities 61 Payments into the arrangement and duration 62 Default 63 Costs 63 Dividends 63 Co-operation 64 Guarantees, crédit and other matters 64 The supervisor, his duties and powers 65 Voidable transactions and offences 65 6 CREDITORS 67 Introduction 67 Preferential creditors 68 The preferential status of certain liabilities 68 Date for calculating preferential liabilities 68 Variation of preferential status 69 Taxes which hâve preferential status 69 Crown set-off 70 Development of attitude to voluntary arrangements by the Crown 70 Proposed abolition of the Crown's preferential status 71 The tax authorities' voluntary arrangement service 73 The State's preferential status outside the United Kingdom 74 Secured and partially secured creditors 75 Ordinary unsecured creditors 81 Creditors whose claims are uncertain or future 84

4 Contents ix Creditors claiming set-off 89 Creditors who are connected 90 Employées 93 Guarantors 95 Overseas creditors 96 Creditor's committees 97 7 THE CREDITORS' MEETING 101 General 101 Creditors not given notice of a creditors' meeting 106 The chairman of a creditors'meeting 109 Adjournment of the creditors' meeting 110 Attendance by a director at a creditors' meeting 112 Proxies 114 Modifications 116 Chairman's report and records 118 Challenge of décisions of creditors' meeting IMPLEMENTATION AND SUPERVISION OF THE CVA 125 Disclosure 125 Implementation of the proposai 127 The payment of dividends to creditors 134 Régulation and compliance 136 Challenge ofdirectors'actions 138 Variation of the terms of a voluntary arrangement 145 Voluntary arrangement following liquidation 148 Change of supervisor 151 Closure of the arrangement 153 Personal conduct of the supervisor DEFAULT AND FAILURE OF A CVA 159 Default of the voluntary arrangement 159 The liability of the supervisor 161 The liability of directors 167 Certificate of non-compliance 169 Effect of default on trust created by a CVA 171 Winding-up pétition following default 175 Supervisor subsequently acting as liquidator TAXATION 179 Corporation tax 179 Value added tax PARTNERSHIP VOLUNTARY ARRANGEMENTS 185 Partnerships generally 185 Limited liability partnerships 187 Partnerships the moratorium 191

5 x Company Voluntary Arrangements 12 CONCLUSION AND THE FUTURE 195 Proposai for change 196 APPENDICES Appendix 1 Législation Insolvency Act 1986, Part I (as amended int al by the Insolvency Act 2000) 203 Schedule Al to the Insolvency Act 1986 (introduced by the Insolvency Act 2000) 212 Table A to the Companies Act 1985 (extracts relating to meetings) 242 A summary of the provisions of sections of the Companies Act 1985 relating to meetings 250 Insolvency Rules 1986 (as amended) 253 Appendix 2 Court Protection in the Irish Republic 271 Appendix 3 Sample proposai 275 Appendix 4 Sample nominee's report 313 Appendix 5 Association of Business Recovery Professionals Statement of Insolvency Practice number 3 (E&W) 315 Voluntary arrangements A creditor's guide to insolvency practitioner's fées 327 Appendix 6 Forms and draft letters 331 Appendix 7 The voluntary arrangements service of the Inland Revenue and HM Customs and Excise VAS newsletter, summer VAS helpsheet (CVA/PVA) 365 Index 367