The CVA provided for the payment by the company of contributions to the supervisors for distribution to creditors. The company went on into a creditors’ voluntary liquidation.
Held: The sums held by the supervisors in trust for the CVA creditors remained subject to that trust notwithstanding the liquidation. Blackburne J said as to a CVA: ‘ . . the effect of the creditors’ approval of the debtors’ proposal is, as is well-established, to give rise to a species of statutory contract between the creditors bound by the arrangement on the one hand and the debtor on the other.’ and ‘An arrangement is usually put together in some haste. Mod~flcations to it are frequently made at the statutory meeting of creditors with little time to reflect on how they relate to the other terms of the debtor’s proposal. Quite often, as this case demonstrates, the resulting terms are clumsily worded. The arrangement ought therefore to be construed in a practical fashion. Otherwise there is a risk that careless drafting coupled with a too-literal approach to its construction will serve to frustrate rather than achieve the purpose of the arrangement.’
Judges:
Blackburne J
Citations:
[2001] BCC 421, [2002] 2 BCLC 576
Jurisdiction:
England and Wales
Cited by:
Cited – Wright and Another (Liquidators of SHB Realisations Ltd) v The Prudential Assurance Company Ltd ChD 6-Mar-2018
IVA is a special form of contract
Liquidators asked the court whether sums sought by the insolvent company’s landlords were payable and or provable. Under an IVA, the copany had been paying reduced rents, but the arrangement document provided that the full rents would be restored on . .
Lists of cited by and citing cases may be incomplete.
Insolvency, Company
Updated: 16 May 2022; Ref: scu.605851