Application for leave to enforce security or seek possession despite a moratorium on a company voluntary arrangement
| Author | Mark Watson-Gandy |
| Pages | 239-251 |
OBJECTIVE
Whilst a company voluntary arrangement (CVA) moratorium is in force, a company meeting cannot be called or requisitioned, a landlord cannot forfeit the company’s lease by peaceable re-entry, security cannot be enforced, goods cannot be repossessed, legal proceedings or process cannot be instituted or proceeded with, and execution and distress cannot be levied against the company or its property.
The exception to this rule is where the court gives leave.
APPLICATION
The application is made by application notice on Form IAA on notice and should be made to the registrar or district judge.
COURT FEES
Where fresh proceedings need to be brought, a court fee of £280 is payable.
EVIDENCE
A witness statement should be prepared in support of the application. This should address:
240 Corporate Insolvency Practice
ƒ the name and capacity of the deponent to speak for the applicant;
ƒ the nature of the applicant’s interest;
ƒ the nature of the security if any;
ƒ the manner or rights of enforcement that the applicant’s interest gives him
(so far as it is material to the application);
ƒ what steps the applicant wishes to take;
ƒ the amount of money owed to the applicant;
ƒ the value of the asset;
ƒ that a CVA has been entered into and when it was entered into;
ƒ that there is a moratorium in force;
ƒ that the moratorium created by the CVA prevents his taking the proposed steps without the consent of the administrator or the permission of the court;
ƒ whether the supervisor’s consent has been sought and his response;
ƒ but for the moratorium, how the applicant would wish to enforce his interest;
ƒ the consequences for the applicant of his being rendered unable to enforce his interest;
ƒ the consequences for the company and the other creditors of his being allowed to enforce his interest;
ƒ that the applicant seeks permission from the court.
The witness statement should exhibit:
ƒ a copy of the arrangement or proposal;
ƒ evidence of the interest that the applicant seeks to enforce;
ƒ evidence showing the entitlement to take the steps proposed by the applicant;
ƒ evidence of the level of debt;
ƒ evidence of the value of the asset (if applicable);
ƒ any documents relevant to the issue;
ƒ any documents relevant to the facts upon which the issue arises.
SERVICE
The usual rule is that, subject to any other express provision, the application must be served at least 14 days before the date fixed for the hearing.
Service may be effected personally
service on that person’s solicitor, if they are authorised to accept service on that person’s behalf.
Note: if the court grants leave, the directors need to send an office copy of the court order to the Registrar of Companies within 14 days of the order.
KEY STATUTORY PROVISIONS
Paragraphs 12 and 20 of Schedule A1 to the Insolvency Act 1986
12(1) During the period for which a moratorium is in force for a company—
(a) no petition may be presented for the winding up of the company,
(b) no meeting of the company may be called or requisitioned except with the consent of the nominee or the leave of the court and subject (where the court gives leave) to such terms as the court may impose,
(c) no resolution may be passed or order made for the winding up of the company,
(d) no administration application may be made in respect of the company, (da) no administrator of the company may be appointed under paragraph 14 or 22 of Schedule B1,
(e) no administrative receiver of the company may be appointed,
(f) no landlord or other person to whom rent is payable may exercise any right of forfeiture by peaceable re-entry in relation to premises let to the company in respect of a failure by the company to comply with any term or condition of its tenancy of such premises, except with the leave of the court and subject to such terms as the court may impose,
(g) no other steps...
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