WHAT IS THE EFFECT OF A CVA?
If approved, it binds all creditors
who are sent notice of the meeting of creditors
and who are all entitled to vote whether or
not they actually decided to vote or attend
the meeting. This means that after the approval
of the CVAž those creditors will under normal
circumstances, be unable to take any alternative
action to recover their debt in full.
Even if a creditor votes against the proposal
and nevertheless the proposal is approved
by a majority of 75% of creditors by value,
then the dissenting creditor will be bound
by the terms of the CVA.
The IP will send to all creditors notice of
the meeting of creditors together with a copy
of the proposal for their consideration.
Typically, the proposal will deal with the
various different types of creditors in different
manners. Secured creditors cannot have their
security overreached by the CVA without their
authority.
Further creditors will be paid in accordance
with the priority as set out above. |
