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Company Voluntary Arrangements & how to avoid a Pensions Regulator Claim

A company Voluntary Arrangement relies on your creditors agreeing the proposed restructuring. If more than 25% reject it then it won’t be approved, and the likely outcome is liquidation and closure of the company.

The Pension Regulator is government body that controls the Pension Protection Fund (“PPF”). The PPF maybe a very large creditor in proportion to other creditors and can therefore likely influence the outcome of a CVA.

You can’t as such avoid a claim. You are either going to have a shortfall to the PPF or not.

The PPF will bail out pension funds for the benefit of employees so they don’t lose out in the event of insolvency. Typical large companies using the PPF are Carillion and Toys R Us.

The PPF are entitled to warning of a possible insolvency and should be consulted by the insolvency practitioner dealing with the company early on. They are an important stakeholder in the outcome of the CVA and will usually be a large creditor.

The PPF could insist funds are put aside for employee pensions in the CVA  – which might result in any CVA proposal being unworkable.


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