The number of company insolvencies subject to compulsory liquidation rose in the third quarter of 2016 compared to the previous quarter, and the same period last year. 632 businesses faced liquidation during this period, a rise of 2.4% on the same period in 2015. With the uncertainty surrounding Brexit still hanging over many businesses, it’s important to know that, no matter the size of the organisation, there are procedures that can be undertaken to support struggling businesses.
Who is eligible for a CVA?
Businesses are eligible for company voluntary arrangements (CVAs), which is an insolvency process that allows for company rescue, as opposed to total sale of the business and assets. A CVA allows a company to make an arrangement with its creditors in satisfaction of some, or all, of its debts. To enter a CVA, a company’s arrangement for repaying creditors must be approved by three-quarters of them and supervised by an Insolvency Practitioner. In addition, more than 50% of the company’s shareholders need to approve the CVA.
Getting a CVA accepted with The Insolvency Experts
A CVA is a legal agreement that allows you to keep control of your business by only paying what you can afford on your debts. The CVA takes effect if approved at both the creditors’ and the shareholders’ meetings. If there is a difference of decision between the creditors and the shareholders, the decision of the creditors will take precedence, subject to any order of the court. A voluntary agreement proposal will be created by an Insolvency Practitioner based on the finances of your business. This is then put to your creditors, with 75% approval required for it to be accepted. It then must be sanctioned by your shareholders before it can be implemented. A trust account is set up for payments to be made into and for creditors to be paid from if everything has been agreed. 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. With the number of businesses facing insolvency set to rise further, it’s important for those facing these issues to consult with insolvency specialists to give their business the best chance of survival and success.
Contact The Insolvency Experts for CVA advice
For any more information on company voluntary arrangements, please get in touch with The Insolvency Experts now. We can help you to keep control of your business and avoid a winding up petition. Contact The Insolvency Experts online or call us directly on 0300 303 8284 now.