Frustration, COVID-19 and company voluntary arrangements – Radcliffe Chambers
‘Your world appeared to be collapsing. You had a good core business, but because of cash flow difficulties, you could not pay your debts as and when they fell due. You were then saved – or, at least, you thought you were- by a trading company voluntary arrangement (“CVA”), under which you are required to make regular monthly contributions of a certain amount. You thought that you would survive with the protection of your CVA – that is until Covid-19 struck. Now, as a non-essential business, you have been forced to close, albeit temporarily, by The Health Protection (Coronavirus, Restrictions) (England) Regulations 2020 (“the 2020 Regulations”). Alternatively, you are allowed to stay open, but because of Government Guidance about social distancing, you have had to reduce your workforce, or your workforce is much reduced because of sickness or self-isolation. Alternatively, for commercial, health and safety or other reasons, you have decided temporarily to close your business. All of this has stopped or reduced your turnover and as a result you are unable to meet the payment requirements of your CVA. Is it open, in these circumstances, for anyone to argue that the restrictions imposed on your business and your consequent failure to comply with your CVA have frustrated your CVA?’
Radcliffe Chambers, 15th April 2020
Source: radcliffechambers.com
