Essay Example on Commentary and Critical Analysis

When the proposed CVA is being approved most of the ongoing costs will only be deducted through the monthly repayment as agreed between the debtors and the creditors in the proposal Most importantly the company is protected against any legal action Once the company applied for CVA then the law will not constitute that they have wound up If there is a situation that their bank accounts being frozen due to bankruptcy then the company may go for Validation Order to reopen their bank accounts as CVA mechanism protects the debtor companies from any insolvency Also at the moment the creditors accepted all the terms provided in the CVA proposal then the creditors shall not make any threatening acts taking any legal action or having interest from the debtor of the company If they are said to have done all the forbidden acts then the debtor of the company shall have the rights to take legal action against the creditors as they did not fulfil their obligation 

As mentioned earlier at the moment whether the creditors are present or not present at the meeting voted for the approval then they are all bind to the proposal of CVA In other word the creditors is prevented from taking any legal action against the debtor of the company or else they will be prevented from recovering any debts from the debtor as mention in CVA Thus the CVA is said to be a pro debtor mechanism as in most of the situations they supported them by preventing the creditors from taking any legal action against them once the proposal is approved Therefore once again CVA is more to a pro debtor mechanism as it supports the debtor in most of the circumstances by protecting the company under all legal actions such as winding up matters not reported in Gazette to help the company to solve and prevent from any insolvency chances extending the period of time for repayment of debts to the creditors and to reduce the strains of the company from its debts as they are already facing financial difficulties