Company Voluntary Arrangements
How a Company Voluntary Arrangement can save your business
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.
The advantages of a CVA are:-
• It is a legally binding agreement on all the company's unsecured creditors, including HMR&C and future and contingent creditors
• Up to 80% of the company's debts can be written off
• The payments to creditors (from as little as 20%) are paid by installments over a period of up to 5 years
• The business continues to trade under the control of its directors
• Minimum disruption occurs (it is probable that your customers will be unaware of the CVA)
• A CVA enables onerous contracts, leases, obligations etc. (including employee contracts) to be terminated at no cash cost to the company
• No investigation into the company's affairs and the conduct of the directors; no transaction can be overturned
• Any accrued tax losses are not lost, and can be used to off-set future tax liabilities on any future profits
Informal Company Arrangements
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.
Our team of Insolvency Practitioner, work for you and not your creditors, can give honest, pragmatic advice on the most beneficial options for you and your business. In most circumstances, the best form of business rescue is to use the Liquidation procedure, as Liquidation does not mean the death of the business.
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