Wilberforce Chambers
10 Experts
16 Contributions by Wilberforce Chambers Experts
PRACTICE NOTES
Who is the nominee and what is their role in the CVA?
The nominee is a central figure within a company voluntary arrangement (CVA). For general background on CVAs as a whole, see Company voluntary arrangements—overview. Their involvement continues only up to the point at which the CVA proposal is either sanctioned or declined, and no further. A nominee must be a licensed insolvency practitioner (IP). This stipulation ensures that any CVA will be subject to independent scrutiny throughout that phase.
Historically, section 389A of the Insolvency Act 1986 (IA 1986) permitted other persons to be authorised solely to act as nominees or supervisors in voluntary arrangements. In practice this route was never taken, and IA 1986, s 389A was repealed by the Deregulation Act 2015, being replaced by the introduction of a regime for the partial authorisation of insolvency
Restructuring & Insolvency
PRACTICE NOTES
Grounds to challenge the company voluntary arrangement
An applicant may contest the approval of a company voluntary arrangement (CVA) on one or more of the following bases:
the proposal, in whole or in part, does not amount to a composition or arrangement within section 1(1) of the Insolvency Act 1986 (IA 1986)
the arrangement causes unfair prejudice to the interests of a creditor, member or contributory of the company
there has been a material irregularity at, or connected with, a company meeting or the relevant qualifying decision procedure (see SIP 6)
Although a CVA (or individual voluntary arrangement (IVA)) must be challenged through the statutory framework in IA 1986, the core principles of good faith and equal treatment—foundational to the pre‑1986 bankruptcy regime—help shape the application of those provisions (see Re New Look; while New Look was due to be taken to the Court of
Restructuring & Insolvency
PRACTICE NOTES
Modifications to company voluntary arrangements (CVAs)
There is limited statutory direction on how CVA modifications should be approached. Some direction appears in Statements of Insolvency Practice (SIP) 3.2.
Alterations to a CVA proposal are acceptable, so long as they do not:
reshape the CVA so extensively that it is no longer a CVA at all (for example, a change compelling the company to enter administration would be impermissible)
restrict, vary, or diminish a secured creditor’s right to realise its security without that creditor’s express consent
reorder distributions so that any preferential creditor loses priority over non-preferential creditors without that creditor’s express consent
upset the rule that all preferential creditors share dividends pari passu without the disadvantaged creditor’s express consent
Amendments affecting preferential creditors cannot be approved merely because a majority of preferential creditors agree; each affected preferential creditor must consent.
Restructuring & Insolvency
PRACTICE NOTES
Who is the supervisor and what is the supervisor’s role in a company voluntary arrangement (CVA)?
The supervisor is a pivotal figure within a CVA. For broader guidance on CVAs, see Practice Note: Company voluntary arrangements. Once creditors approve a CVA proposal, the supervisor’s duty is to ensure the arrangement is carried out in strict accordance with its terms.
The role must be performed by a licensed insolvency practitioner (Insolvency Act 1986, s 1(2); Insolvency (England and Wales) Rules 2016, SI 2016/1024, r 2.3(1)(i)). An earlier provision (IA 1986, s 389A) would have allowed other individuals to be authorised solely to act as nominees or supervisors in voluntary arrangements, but it was never utilised. Section 389A was repealed by the Deregulation Act 2015 and replaced by a regime permitting the partial authorisation of insolvency practitioners. The IR 2016, SI 2016/1024 apply to CVAs.
A CVA
Restructuring & Insolvency
PRACTICE NOTES
Summary
This Practice Note outlines the position of Financial Support Directions (FSDs) under the Pensions Act 2004 (PA 2004), with a particular focus on how FSD liabilities rank in insolvency, as clarified by the Supreme Court in Nortel/Lehman. The ruling offers key guidance on:
the priority of FSD liabilities on an insolvency
the correct interpretation of the Insolvency (England and Wales) Rules 2016 (IR 2016), SI 2016/1024, r 14.1 (previously the Insolvency Rules 1986 (IR 1986), SI 1986/1925, r 13.12(1)(b)), which defines contingent debts provable in an insolvency
the character of insolvency expenses
the extent, if any, of the court’s residual discretion to order payments outside the statutory distribution regime
The decision also addressed the treatment of contribution notices issued under PA 2004, s 47 (section 47 CNs), which serve to enforce compliance with FSDs...
Restructuring & Insolvency
PRACTICE NOTES
This Practice Note sets out the following facets and issues concerning an office-holder’s exposure to adverse costs in litigation:
the overall position where an office-holder is a claimant or a defendant in proceedings
the office-holder’s entitlement to reimbursement from the insolvent estate
the possible costs implications of discontinuing a claim
the potential ranking of any adverse costs order
the personal exposure of office-holders for adverse costs
security for costs
The general position if an office-holder is a claimant or defendant in litigation
If an office-holder issues proceedings in their own name, they proceed entirely at their own risk as to costs. Should a costs order be made against them, they are personally liable and cannot confine that liability to the extent of assets available in the insolvent estate (Re Wilson Lovatt & Sons). However, unless the court directs otherwise, they will have a right to reimburse the amount of any adverse costs order from the
Restructuring & Insolvency
PRACTICE NOTES
Who is the nominee/supervisor and what is their role in the individual voluntary arrangement?
The nominee and the supervisor play central roles in an IVA. Often, one professional fills both positions, although this is not a necessity. The nominee’s duties extend only up to the point when the IVA proposal is accepted or declined. If creditors approve the proposal, the supervisor then assumes responsibility for ensuring the arrangement is delivered exactly in line with its terms. No person may act as nominee or supervisor in an IVA unless they are a licensed insolvency practitioner (IP), a safeguard that provides independent scrutiny and professional supervision.
Under section 253(2) of the Insolvency Act 1986 and rule 8.3 of the Insolvency (England and Wales) Rules 2016 (SI 2016/1024), the IVA proposal must include:
the proposed supervisor’s name, address, qualification, and regulated professional body; and
the
Restructuring & Insolvency
PRACTICE NOTES
What is the Determinations Panel?
The Pensions Regulator’s Determinations Panel (the Panel) is a committee that decides whether the Pensions Regulator (the Regulator) should exercise certain key regulatory functions in appropriate cases. When it concludes a function ought to be exercised, the Panel then carries out that function itself.
Establishment and composition
Under Section 9(1) of the Pensions Act 2004 (PeA 2004), the Regulator must constitute and maintain the Panel. The Panel comprises a Chair plus at least six further individuals. An ‘appointments committee’, created by the Regulator’s chair, nominates the Chair, who is then appointed by the Regulator’s Board. The remaining members are proposed by the Panel’s Chair and appointed by the Regulator’s Board. Panel members are not required to be lawyers. They collectively possess legal, business and/or pensions expertise. They are not permitted to be members of the Regulator or its staff, nor members of the
Pensions
PRACTICE NOTES
A company voluntary arrangement (CVA) proposal, or any alteration to it, cannot be approved by the company or its creditors if it would interfere with a secured creditor’s ability to enforce its security, unless that secured creditor agrees. In practice, where significant secured creditors or major landlords are involved, it would be atypical to advance a CVA without prior dialogue with them before circulating the proposals (see Practice Note: CVAs—landlord issues and remedies). In addition, where a CVA is put forward within 12 weeks of a moratorium ending under the Corporate Insolvency and Governance Act 2020 (CIGA 2020), those owed unpaid moratorium debts and priority pre-moratorium debts effectively hold a veto: neither the company nor the creditors may sanction the CVA unless those liabilities are discharged in full, unless the relevant creditors consent. CIGA 2020, Sch 3, para 4 protects creditors with unpaid
Restructuring & Insolvency
PRACTICE NOTES
The Pensions Regulator (the Regulator)
The Regulator is an arm’s-length public body set up under the Pensions Act 2004 (PeA 2004). Its authority to impose contribution notices and financial support directions appears in PeA 2004, ss 38–50. Although the Act does not use the label, these provisions are widely known as the Regulator’s ‘moral hazard’ powers. Their purpose is to counter the ‘moral hazard’ arising from the Pension Protection Fund (PPF): the possibility that corporate groups might organise their structures so as to heighten exposure within their pension schemes, comfortable that the PPF would intervene if the employer entered insolvency. The principal moral hazard tools—and the only ones exercised so far—are the power to issue a contribution notice (CN) and the power to issue a financial support direction (FSD). A CN compels the recipient to pay a specified amount into a defined benefit
Restructuring & Insolvency
PRACTICE NOTES
Power to vary a CVA
Most company voluntary arrangements include a power to vary, allowing changes if circumstances alter or minor amendments are needed, so the arrangement need not be brought to an early end. This offers a less severe route for creditors, as the CVA may itself state that early termination will oblige the supervisor to petition for administration or a winding-up order.
Following the Insolvency (England and Wales) Rules 2016 (IR 2016), SI 2016/1024, a CVA proposal can be amended with the nominee’s agreement in writing, provided that:
the nominee is not acting as the company’s liquidator or administrator; and
the nominee’s report has not been filed at court under section 2(2) of the Insolvency Act 1986 (IA 1986).
Beyond this, there is little statutory direction on varying a CVA once creditors have approved it. A supervisor may seek
Restructuring & Insolvency
PRECEDENTS
Number of matter CVA [ insert matter number ] of 20 [ insert year ]
Report of the consideration of the proposal
Pursuant to sections 4(6) and 4(6A) of the Insolvency Act 1986 and rule 2.38 of the Insolvency Rules 2016, I certify that the company meeting in the above matter, properly convened for [ insert time and date ] at [ insert place of meeting ], was duly held. Creditors were duly invited to consider the proposal by way of a decision procedure, and I therefore report as follows:
The directors of [ insert company name ] Limited put forward a Voluntary Arrangement under Part I of the Insolvency Act 1986 dated [ insert date ]. This was [ approved OR rejected ] by the company and [ approved OR rejected ] by the creditors, with the modifications annexed as Appendix 6. [ IF THE
Restructuring & Insolvency
PRECEDENTS
Filed on behalf of the defendant
Witness Statement of [ enter the initial and surname of the witness ].
Witness statement number: [ enter the number of the witness statement relating to this witness ].
Exhibit particulars: [ enter initials and the number for each exhibit referred to ].
The statement date: [ enter date ].
[ Date of translation: [ enter date ] ].
Claim number: [ enter claim number ].
...
Dispute Resolution
PRECEDENTS
Filed on behalf of the claimant
Witness’s Statement for [ insert initial and surname of witness ] Statement number assigned: [ insert number of witness statement in relation to the witness ] Exhibit particulars listed herein: [ insert initials and number of each exhibit referred to ] Date the statement was completed: [ insert date ] [ Translation date: [ insert date ] ] Claim number reference: [ insert claim number ] ...
Dispute Resolution
If you expected to see yourself on this page, click here.
