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Company Voluntary Arrangements (CVAs)
A CVA is an arrangement between an insolvent company and its creditors that allows the company to be protected under a moratorium and prevents creditors attacking the company. It allows a viable but struggling company to repay some, or all, of its historic debts out of future profits, over a period of time to be agreed.
This involves a Proposal made by the Company's Directors to the creditors and shareholders providing a full disclosure of all the company's assets and liabilities together with a proposition for enhancing the return to the Company's creditors compared with what they could expect to receive in any other insolvency procedure. The Proposal usually involves delayed or reduced payments of debt, capital restructuring or an orderly disposal of assets.
It is proposed to creditors and shareholders at separate meetings and there is limited involvement by the Court.
Despite being a formal procedure under the Insolvency Act 1986, it is possible to build in as much flexibility in dealing with the Company's asset and liabilities as necessary. A Company Voluntary Arrangement usually allows the continued involvement of the Company's Directors in its ongoing affairs subject to review by a Supervisor who are Licensed Insolvency Practitioners (IP).
The benefits of a Company Voluntary Arrangement (CVA).
- Lower costs than an Administration or Receivership
- Directors and shareholders can remain in control of the company
- Improve cashflow, quickly and provide the necessary breathing space to implement strategies that will help secure the long term future of the company
- Stop pressure from HMRC while the CVA is being prepared
- Help reduce costs, rapidly
- Terminate onerous employment contracts, leases, supply contracts and property leases
- Much less publicity associated with a CVA. You are not obliged to inform your customers therefore helping maintain customer loyalty
- Remove redundancy payment liability
If you would like to discuss arranging a CVA or have any questions please call us in confidence on 0800 046 8297 or send us an email
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