Corporate Voluntary Arrangement (CVA) is one of the corporate rescue mechanism available under the Companies Act 2016. You may find out more on the various type of corporate rescue mechanism here.
Eligible for Corporate Voluntary Arrangement?
CVA is not applicable to:
-Companies under the Capital Markets & Service Act
-A company which creates a charge over its assets
Who can initiate CVA?
A CVA can be initiated by the directors, a creditors, judicial manager or liquidator.
A nominee shall be appointed to supervise the implementation of voluntary arrangement.
Who can be a nominee?
A nominee shall be a qualified insolvency practitioner.
CVA in a brief snapshot:
The company shall furnish all relevant information together with the rehabilitation proposal to the nominee for his opinion.
The nominee will then revert with an opinion as to whether:
-the proposal has reasonable prospects for success;
-the company has enough funds to run its business; and
-the creditors ought to be called for a meeting.
The company then files CVA application to Court together with relevant documentation such as the statement of affairs, the proposal, opinion of nominee and etc.
A 28 days moratorium upon filing and a meeting of creditors shall be summoned. The moratorium may be extended up to 60 days upon obtaining approval from 75% of the creditors.
During the moratorium period, no action can be taken against the company.
Upon approval by majority of 75% of creditors on the proposal, the proposal is binding on all creditors.
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