Company Voluntary Arrangement (CVA)

A CVA is a rescue tool for a company which has a viable business plan but is hindered by historic debt. The primary objective of the CVA is to enter into a negotiated settlement with its general body of creditors. All creditors voting in a CVA are legally bound to accept the terms of the arrangement, including those who choose not to vote. The proposal to the creditors must be approved by more than 75% in value for those voting.

Why Use a CVA?

The CVA procedure allows the directors to retain control, to trade out of their current financial problems, ensures the business can return to profitability in a legally binding and commercially structured binding agreement with their creditors. The company can agree with its creditors a viable long-term plan, typically three to five years. During the process the company will pay its creditors a proportion or all of its debts over a specified period.

The company is overseen by a licensed insolvency practitioner known as a supervisor, who will decide on the payment terms based on cautious, viable and realistic forecasts. Where the company proposes to make monthly contributions from income, it is important that this is affordable. If your business is potentially viable but struggling with cash flow problems or facing threats from creditors, a CVA could help bring an end to the creditor pressure and revive your company.

If you would like to speak to one our partners to arrange a free initial consultation, please contact Paul Davis – Head of Corporate Recovery and Insolvency