Company Voluntary Arrangement
If the company is viable and the directors are committed to working hard to turn the business around then a Company Voluntary Arrangement or CVA can be appropriate. A Company Voluntary Arrangement (or CVA) is a legal agreement between a company and its creditors, based on the company repaying a fixed amount that is lower than the actual outstanding debt. The repayments are calculated monthly, based on an amount that the business can reasonably afford. Remaining debts are written off at the end of the arrangement.
Customers do not need to know you are in a CVA [although it is a matter for public record via the courts and Company House]. We normally achieve good support from suppliers, who are often willing to accept a CVA as they will prefer to continue to trade and get a return from a more secure trading relationships in the longer term, banks can be less cooperative and our expertise again will remove the current bank arrangements [where needed and appropriate] and we can typically offer a packaged solution offering our clients re-finance. Using Asset finance and or replacement invoice finance, such as factored debt or CID [confidential invoice discounting, the company will often be able to secure the required finance to support the business through the CVA. In some cases our parent company Incubator Capital Partners will invest in the business as a Business Angel or provide independent business finance.
Informal Company Voluntary Arrangement
As above but arranged with out the legal protection of the courts, this can be an appropriate solution in some cases, and we have been very successful in rescuing business with this tool.
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