Abstract
This chapter examines the impact of the commencement of formal insolvency procedures on corporate governance. The discussion begins with an examination of the fundamental nature of a CVA and the influence of secured and unsecured creditors and shareholders on the process. Whilst directors may retain general control of the operations of the company during a CVA, an increasing level of influence passes to secured creditors. By virtue of their security interests and contractual position, lenders are able to exert control over any strategic decisions. The second part of the chapter then focuses on administration, where the control of the company is transferred to an insolvency practitioner, who is ultimately responsible for ensuring that the claims of creditors are met, within existing contractual relationships, determining the long-run financial viability of the company and the reality of closure when the financial position is no longer sustainable.
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Legislation
Insolvency Act (IA) 1986, ss1–2, s 4(3), s 6, s 176A, 176A(3), s 176A(3), s 176 A (5), s 234(2), s 235(5), s 236(2)(c).
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Parkinson, M.M. (2018). Corporate Governance in Insolvency. In: Corporate Governance in Transition. Palgrave Studies in Governance, Leadership and Responsibility. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-77110-6_5
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