Reforms are needed to the current company voluntary arrangement (CVA) process, according to both R3 and the British Property Federation (BPF).
R3 (the trade association for the UK’s insolvency, restructuring, advisory, and turnaround professionals) has published a research report recommending a number of reforms to improve the effectiveness and reputation of CVAs. These include:
The BPF has also called on the government to undertake an urgent independent review of CVAs, citing three issues in particular with the current system:
It is interesting to note the comments from R3 and the BPF calling for reforms of the CVA process.
Clearly there are legitimate concerns arising from the considerable number of CVAs which are being proposed at the current time.
While it is important that CVAs are not abused, they remain a valuable tool to restructure businesses with large property estates which are no longer fit for purpose. A review of CVAs is sensible to ensure that the competing interests of businesses and creditors (most particularly landlords and their lenders) are properly balanced.
TLT has a full service team of insolvency specialists who are well placed to advise on a wide range of insolvency situations.
Contributor: Tessa GloverThis publication is intended for general guidance and represents our understanding of the relevant law and practice as at June 2018. Specific advice should be sought for specific cases. For more information see our terms & conditions.