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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

What is a Company Voluntary Arrangement?

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. Find out more about the CVA process. ß Button link.

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.

Company Voluntary Arrangements are a very good tool for helping your business stay afloat, and to stop winding up petitions. To find out whether a CVA is right for your business contact our team.

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 is the criteria for entering 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. The earlier you have an advisor on your side the better, with more chance of the business returning to profitability and returned to the shareholders.

Get in touch with The Insolvency Experts

The Insolvency Experts can provide help and advice when it comes to CVAs and your business. For more details on our services you can contact the experts online, or speak to us direct on 0300 303 8284. Try to find the answer you’re looking for my choosing one of the options below.

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What is a CVA?
michael beal