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ACCA Applied Skills · Corporate and Business Law (Global) · Insolvency and administration

Marlow Ltd's directors put a CVA proposal to its unsecured creditors. Creditors holding 80% by value of the debts voting say yes, and 20% vote no. Under the general rule for approving a CVA, what is the result as regards the creditors' decision?

The proposal is approved because a CVA needs at least 75% by value of the creditors voting, and 80% voted in favour. Unanimity is not needed, and once approved the arrangement binds all unsecured creditors, including those who voted against.

  1. AThe proposal is approved, as at least 75% by value of those voting agreedCorrect
  2. BThe proposal fails because approval must be unanimous
  3. CThe proposal fails because 90% by value is required
  4. DThe proposal is approved only if the court also consents to it first

Explanation

A CVA needs approval by at least 75% by value of the creditors voting. With 80% in favour, the threshold is met, and the proposal binds all unsecured creditors, including the dissenters. The unanimity and 90% options state incorrect thresholds, and court consent is not a precondition to the vote.

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