Question to the Department for Business and Trade:

To ask the Secretary of State for Business and Trade, what steps she is taking to prevent solvent companies from using Company Voluntary Arrangements to avoid meeting their (a) redundancy and (b) notice period obligations.

Company Voluntary Arrangements (“CVAs”) are a restructuring process for insolvent or contingently insolvent companies. To be eligible, a company must meet the insolvent test as assessed by an insolvency practitioner and the CVA must be agreed by a majority of creditors and shareholders.

Where redundancies are necessary as part of a CVA, the Government ensures employees have appropriate safeguards through employment rights’ legislation. Redundancy payments (within statutory limits) are guaranteed from the National Insurance Fund. The Redundancy Payments Service makes these payments directly to the employees and will seek to reclaim the money back from the company as a creditor.