The Insolvency Act 1986 (Amendment) (No. 3) Regulations 2002

Explanatory Note

(This note is not part of the Regulations)

These Regulations amend the eligibility criteria and qualifying conditions for a company obtaining a moratorium under the new CVA moratorium procedure set out in Schedule A1 to the Insolvency Act 1986 (c. 45). Schedule A1 was inserted into the Act by paragraph 4 of Schedule 1 to the Insolvency Act 2000 (c. 39). The eligibility criteria and qualifying conditions are set out in paragraphs 2, 3 and 4 of Schedule A1.

Three new eligibility criteria are introduced. The first makes a company ineligible to obtain a moratorium under that procedure if the company is a party to a capital market arrangement. An arrangement will be a capital market arrangement if it meets the criteria set out in paragraph 4A and one or more of those in 4D.

The second criterion set out in paragraph 4B will make a company ineligible if it is a project company of a public-private partnership (PPP) project which includes step-in rights. The expression “project company” is defined in new paragraph 4H and the expression “step-in rights” is defined in new paragraph 4J.

The third criterion will make a company ineligible if it has incurred a liability under an agreement of £10 million or more.

The qualifying conditions set out in paragraph 3 of Schedule A1 are amended to exclude a company which is a holding company of a group which his not a small or medium-sized group as defined by the Companies Act 1985 (c. 6).