Jurisdiction(s):
United Kingdom

MVL to CVL: disputed debts compel conversion; 12‑month payment test under IA 1986 ss 89 and 95; IR 2016 adjudication only (Noal SCSp v Novalpina) [2025] EWHC 1392 (Ch)

Published on: 01 July 2025

Published by a LexisNexis Restructuring & Insolvency expert

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Article summary

What are the practical implications of this case?

When proposing an MVL, directors must ensure their advisers receive every pertinent detail. If a liability is overlooked or contested, the MVL will almost inevitably have to switch to a CVL unless that sum is settled in full within 12 months, or any shorter timeframe set out in the directors’ declaration. The liquidator has no latitude to prolong this window. Under IA 1986, s 95, the liquidator is under a duty to effect conversion from MVL to CVL within seven days of concluding that the 12‑month cut-off (or any shorter period specified by the director(s)) will not be achieved. Once an MVL is underway, creditors of the company gain the advantage in any dispute because the 12‑month MVL deadline cannot be lengthened. Directors should also note that disputed sums are treated no differently for these purposes, and failure to meet the declared timetable compels conversion. There is no scope for any extension. Parties contemplating an MVL would be well advised to...

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