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Looking to liquidate your business? For help call 0300 303 8284
Looking to liquidate your business?
For help call 0300 303 8284

Company Voluntary Arrangement (CVA)

Company Voluntary Arrangements (CVAs) are legal agreements that allow a business to pay what they can afford towards their debts to help them get back on a level footing – allowing you to keep control of your business.

A Company Voluntary Arrangement (CVA) is a good option for many companies that are struggling to keep up to date with debt repayments. As a legally binding agreement, it means that your business cannot be targeted while it is in place with winding up petitions or any other legal recourse. You can pay what is affordable, and more importantly focus on turning around your business and allowing you to keep control.

Once you decide to seek a CVA, a voluntary agreement proposal will be put together by an Insolvency Practitioner, based on your finances. This will be put to your creditors, with 75% approval required for it to be accepted. It also needs to be ratified by your shareholders before it can be implemented. Once it’s been agreed, a trust account is set up for payments to be made into and for creditors to be paid from.

A CVA can buy time for you to improve cash flow, and it can help you to retain the services of key members of staff to ensure you’ve got the best chance of keeping your business solvent.

Why consider a CVA?

• It allows you to keep control of your business

• It provides your company with protection from its creditors

• Your business carries on trading, enabling a restructure to improve profitability

• Rather than calculating numerous creditors, they’re all consolidated into one payment

• Improvements in cash flow, therefore increasing working capital in the business

• Cheaper options that alternatives within the insolvency process – often not requiring the court (unless challenged).

• A discrete proceeding – the situation is not publicly advertised as it is with an administration.

• Can prevent a winding-up petition taken into effect (as long as action is taken quickly)

• Your creditors will feel more confident that they will receive the amount owed, reducing the pressures they put on you

• Enables an ongoing relationship with many of your suppliers, often under different payment terms

What are the criteria for a CVA?

• A business that can return to profitability.

• A commercially structured deal – where your business pays the “right amount over the right timeframe”.

• The introduction of appropriate working capital (as well as the restructuring of debt).

• Buy in from the management team regarding the future changes within the business.

• Advisors that are not only experienced in structuring CVA deals, but that have had success and acceptance of the deals.

Once the Directors of the business have discussed the long-term view of the company, and feel that it is a viable business, it’s essential to take the advice from an experienced Insolvency Practitioner, with experience in structuring CVAs.

An experienced Insolvency Practitioner such as The Insolvency Experts will be able to draw from our experience of successfully accepted CVAs, to improve the chance of it being accepted, and ultimately returning the business to you.

What is a CVA?

Company Voluntary Arrangements (CVAs) are legal agreements that allow a business to pay what they can afford towards their debts to help them get back on a level footing – allowing you to keep control of your business.

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The CVA process

By entering into a Company Voluntary Arrangement your business is protected from any further actions from creditors (e.g. winding up petitions). The terms of the CVA can be spread out as per your business requirements, and once approved, stops immediate demands for repayments from existing creditors.

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More information

What is a CVA process?

A CVA, also known as a Company Voluntary Arrangement are legal agreements which are put in place to assist a company in repaying debts owed to creditors. While a CVA is in place, it prevents creditors from pressuring a company and stops your business being targeted for owing debts. A CVA allows a business regain control while making affordable payments. For more information on CVA’s or for advice on the best course of action for your company, get in touch with The Insolvency Experts today.

The CVA Process

The process of a Company Voluntary Arrangement (CVA) is carried out with the help of an Insolvency Practitioner who can help advise your company on the right course of action for your company. It may well be that a CVA is the right answer for your business, however an Insolvency Practitioner can discuss other options which may have better outcomes. The whole process is formal and legal binding, which stops creditors from applying pressure and filing for winding up petitions. Contact The Insolvency Experts for advice on CVA’s and what it can do for your business.

FAQs

Find the answers to the questions you have on insolvency, administration, CVA’s and more in our FAQs. You can find the answers to common questions companies have surrounding the subjects, however if your question is more specific or you need advice on a certain area, get in touch with The Insolvency Experts today and we can help answer your questions and give you professional advice.

Director's Loan Accounts

Directors of businesses use Director’s Loan Accounts (DLA) frequently to move money in and out of a business. This is a legal arrangement and is allowed, however if the money isn’t paid back within nine months of the business financial year-end, this could be deemed an interest free loan. A DLA can also be used to recover debts if a creditor is applying pressure or filing for a winding up petition as it is money that belongs to the company. Contact The Insolvency Experts for further advice on DLA’s and how they can be used to recover debt.

What is administration?

Administration is the name given to the process where an Insolvency Practitioner is appointed as administrator of a business. Their role involves restructuring a business to enable it to continue making profits successfully, or selling the business to preserve value and retain employment. Administration is usually an option if a business is receiving significant creditor pressure and is unable to repay debts and if a business is insolvent. The process is usually the best way to save a businesses from further financial struggles and liquidation. For more information, talk to The Insolvency Experts for professional insolvency advice.

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michael beal