STATEMENT OF INSOLVENCY PRACTICE 3.2

Transcription

1 STATEMENT OF INSOLVENCY PRACTICE 3.2 COMPANY VOLUNTARY ARRANGEMENTS INTRODUCTION 1 A Company Voluntary Arrangmnt (CVA) is a statutory contract twn a company and its crditors undr which an insolvncy practitionr will hav powrs and dutis. An insolvncy practitionr will cntral to th prparation and agrmnt of th proposal, and th implmntation of th arrangmnt, whthr acting as advisr, nomin or suprvisor. Th particular natur of an insolvncy practitionr s position rndrs transparncy and fairnss in all dalings of primary importanc. Th company s dirctors, sharholdrs and crditors should confidnt that an insolvncy practitionr will act profssionally and with ojctivity in ach rol associatd with th arrangmnt. Failur to do so may prjudic th intrsts of oth th company and crditors, and is likly to ring th practitionr and th profssion into disrput. 2 An insolvncy practitionr may askd to assist a company s dirctors whn a CVA may th solution to th company s financial difficultis; or an insolvncy practitionr may propos a CVA as administrator or liquidator. Whr th principls and ky complianc standards in this statmnt of insolvncy practic ar rlvant only to a CVA proposd y a company s dirctors ths ar idntifid as such. PRINCIPLES 3 An insolvncy practitionr should diffrntiat clarly twn th stags and rols that ar associatd with a CVA ( including th provision of initial advic, prparing or assisting in th prparation of th proposal, th functions and rsponsiilitis of th nomin, and th suprvisor) and nsur that thy ar xplaind to th company s dirctors (whr thy ar making th proposal), sharholdrs and crditors. 4 An insolvncy practitionr should nsur that information and xplanations aout all th options availal ar providd to th dirctors, so that thy can mak an informd judgmnt as to whthr a CVA is an appropriat solution for th company (dirctors proposal). 5 An insolvncy practitionr should xplain to th dirctors, thir rsponsiilitis and rol, and th consquncs of a CVA. 6 Whr a CVA is to proposd, an insolvncy practitionr should nsur that it is achival and that a fair alanc is struck twn th intrsts of th company and th crditors ut th nomin should rport accordingly if it is not. 7 An insolvncy practitionr should provid sufficint information to nal th company s sharholdrs and crditors to mak informd dcisions in rlation to 1

2 th proposal and th CVA, and rport accuratly in a mannr that aims to clar and usful. KEY COMPLIANCE STANDARDS 8 Crtain ky complianc standards ar of gnral application, ut othrs will dpnd on whthr th insolvncy practitionr is acting as advisr, nomin, suprvisor, administrator or liquidator. PROVISIONS OF GENERAL APPLICATION Advic (dirctors proposal) 9 Th insolvncy practitionr should hav procdurs in plac to nsur that th information and xplanations providd to th company and/or th dirctors at ach stag of th procss, as appropriat,(that is, assssing th options availal, and thn prparing and implmnting a CVA), ar dsignd to st out clarly: a c d th ky stags and th rols of th advisr, th nomin and th suprvisor; any potntial dlays or complications; and th likly duration of th CVA; th advantags and disadvantags of ach availal option; what is rquird of th company and its dirctors at ach stag; th consquncs of ntring into a CVA, and what may happn if th CVA is not succssfully compltd. Mting th dirctors (dirctors proposal) 11 In viw of th complx natur of CVAs th initial mting with th dirctors should always fac to fac. Assssmnt 12 Th insolvncy practitionr nds to satisfid, at ach stag of th procss, that thr ar procdurs in plac to nsur that an assssmnt is mad of: a c d f th solutions availal and thir viaility; whthr th dirctors ar ing sufficintly cooprativ (dirctors proposal); th dirctors undrstanding of th procss, and commitmnt to it; th attitud of any ky crditors; whthr a CVA would hav a rasonal prospct of ing approvd and implmntd, and whthr a moratorium is rquird or availal 2

3 Documntation 13 Th insolvncy practitionr should al to dmonstrat that propr stps hav n takn at all stags of th CVA, y maintaining rcords of: a discussions with th dirctors, including th information and xplanations providd, th options outlind, and th advantags and disadvantags of ach. All advic providd to th dirctors should confirmd in writing; commnts mad y th dirctors, and thir prfrrd option(dirctors proposal) ; c any discussions with crditors (or thir rprsntativs) and th company s sharholdrs; whr th proposal is mad y an administrator or liquidator, a dtaild not of th stratgy, outlining th advantags and disadvantags of ach option. PROVISIONS OF SPECIFIC APPLICATION Prparing for a CVA 14 Whn prparing for a CVA, th insolvncy practitionr should hav procdurs in plac to nsur, taking account of th company s circumstancs and th natur of th company s financs, that: a. Th dirctors hav had, or rciv, th appropriat advic in rlation to a CVA; this should confirmd in writing if th insolvncy practitionr or his/hr firm has not don so for [dirctors proposal];. Sufficint information is otaind to mak an assssmnt of a CVA as a solution, and to nal a nomin to prpar a rport, including; (i) (ii) (iii) (iv) Th proposal th masurs takn y th dirctors or othrs to avoid rcurrnc of th company s financial difficultis; th likly xpctations of any ky crditors; th ffct of th CVA on third partis whr thir viw may hav an ffct on th viaility of th CVA; and proportionat invstigations into, and vrification of, incom and xpnditur and assts and liailitis. 15 Whthr th insolvncy practitionr has n askd to assist th dirctors to prpar a proposal or a proposal is ing prpard y an administrator or liquidator, th insolvncy practitionr should hav procdurs in plac to nsur that th proposal contains th following: a. sufficint information for crditors to undrstand th company s financial and trading history, including: (i). th rols of th dirctors and ky mploys and thir futur involvmnt in th company; 3

4 (ii). (iii). (iv). th ackground and financial history of th dirctors whr rlvant; why th company has com insolvnt; and, any othr attmpts that hav n mad to solv th company s financial difficultis;. sufficint information to support any profit and cash projctions; sujct to any commrcial snsitivity; c. disclosur of th stimatd costs of th CVA; d. dtails of th sourc of any rfrral of th company, and whr any paymnt has n mad or is proposd in connction with that rfrral, th amount and natur of that paymnt; and,. dtails of any paymnts mad, or proposd to mad, to th nomin and th suprvisor or thir firms in connction with th proposd CVA or othrwis. Th nomin 16 It is th rsponsiility of th nomin to rport in rlation to th proposd CVA. Whn acting as nomin, th insolvncy practitionr should hav procdurs in plac to nsur that: a. Th nomin is al to rport whthr or not: (i) (ii) (iii) th company s financial position is matrially diffrnt from that containd in th proposal and th rport xplains th xtnt to which th information has n vrifid; th CVA is manifstly unfair; th CVA has a rasonal prospct of ing approvd and implmntd; Th proposr s consnt is sought on any modifications to th proposal put forward y crditors, and th proposr undrstands th impact of th modifications on th implmntation of th CVA and its viaility. Th suprvisor 17 Whn acting as suprvisor, th insolvncy practitionr should hav procdurs in plac to nsur that: a whr a proposal is modifid, crditors hav n mad awar of th final form of th accptd CVA; th CVA is suprvisd in accordanc with its trms as approvd y crditors; c th progrss of th CVA is monitord; 4

5 d any dparturs from th trms of th CVA ar idntifid at an arly stag and any appropriat action is takn y th suprvisor promptly; any discrtions confrrd on th suprvisor ar xrcisd whr ncssary, and on a timly asis; f th proposr has consntd to any variation to th trms of th CVA; g nquiris y crditors and sharholdrs ar dalt with promptly; h full disclosur is mad of th costs of th CVA and of any othr sourcs of incom of th insolvncy practitionr or th practic, in rlation to th cas, in rports to crditors; and i th CVA is closd promptly on compltion or trmination. Effctiv dat: xx/xx/xx 5