The Magical powers of a Company Voluntary Arrangement
A Company Voluntary Arrangement appears to have magical powers!
1) it is the only formal rescue procedure that can be used to make debts vanish out of an ongoing trading company.
2) Directors that place their company into a Company Voluntary Arrangement do not face the investigations they would be subjected to in a liquidation or administration.
3) If there is a winding up petition in place then it would be dismissed upon the approval of a Company Voluntary Arrangement.
4) A Director that has failed to observe his “fiduciary Duty”, which is disclosed in the nominee’s report, is often given another chance with a Company Voluntary Arrangement.
You ought to be aware however that a licensed insolvency practitioner who acts as nominee in respect of a Company Voluntary Arrangement prior to approval must consider whether any potential antecedent transaction claims (i.e claims against directors that the liquidator can bring), and must report on the same to creditors when submitting the nominee’s report.