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Recent Posts

  • Give yourself time to think, with the Debt Respite Scheme
  • Preserving your future aspirations in the face of unmanageable debt
  • How sustainable is your debt situation? Your credit report reveals all
  • Strategies for achieving financial freedom from debt
  • Understanding the differences between bankruptcy in England and Wales, and in Scotland

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    City Professional Networking Event – Friday 5th September 2014

    James Rosa Associates Ltd are once again delighted to announce sponsorship of the next City Professionals’ Networking event.

    City Professionals’ Networking lunch is a free informal networking event held monthly at Brookes Brothers Wine and Brasserie.

    If you are a regular attendee of the event, please advise your professional friends and ask them to join us at the next networking event on Friday 5th September 2014

    Date: Friday 5th September 2014

    Venue: Brookes Brothers, 33-35 Brook Street, Holborn EC1N 7RS

    Time: 1:00pm to 3:00pm+

    A map of the venue can be found on the following link

    http://binged.it/XZibWm

    We look forward to seeing you all there

    The benefits of a company voluntary arrangement

    by Keith Steven, KSA Group Ltd

    A company voluntary arrangement (“CVA”) is a powerful rescue tool designed to help companies in financial distress, yet many directors are unaware of its benefits.

    If a company is struggling with poor cashflow and directors are finding it difficult to keep up with tax payments, it’s likely the company is insolvent. While there are a number of options to consider, like administration or liquidation, the CVA approach is designed to turn the business around.

    What is a CVA?

    A CVA is a formal deal between the debtor (an insolvent company) and its creditors (lenders). It allows the company to pay back a proportion of debt from future trading surpluses over a set time-frame (usually between three and five years). Some debt may be completely written off to help ease cashflow pressure. For the CVA to work, the business must be demonstrably viable.

    Unlike in administration, directors stay in control throughout the whole process. A CVA also gives the company an opportunity to restructure and re-evaluate the business, ensuring the right changes are made.

    Benefits of a CVA

    The biggest benefit of going into a CVA is saving the business! With an affordable repayment plan in place and a new structure, your business has every chance of success. Other advantages include:

    • Usually cheaper than an administration
    • It can stop legal actions, like winding up petitions
    • Ease pressure from HMRC (VAT, PAYE, Corporation tax etc)
    • Creditors will receive something back – Xp in the £1
    • Directors stay in control
    • You can terminate contracts and employment
    • You can terminate lease liabilities

    The CVA process

    If you are considering going into a CVA, the company can appoint an insolvency practitioner or supervisor to prepare a CVA proposal (which includes records of accounts and financial forecasts). The CVA must maximise creditors’ best interests for it be considered by all parties.

    The proposal is then filed at Court and a copy is sent out to all creditors. From there, creditors have 17 days to consider the CVA before a meeting is held.

    All creditors can vote at the meeting (or by proxy). The CVA can only go ahead if 75% or over (by value) approve the proposal.

    Once the arrangement is underway, the company will make payments to the CVA supervisor every month. This will be then be distributed pro rata to creditors annually.

    Depending on your financial situation, a CVA may be the best solution. However, it is important you seek legal advice before choosing any option. Directors have a duty to act accordingly in the event of insolvency as any wrongdoings could result in personal liability.

    Keith Steven of KSA Group Ltd has been rescuing and turning around companies since 1994; he has worked for insolvency firms, turnaround funds and venture capital investors. Keith is acknowledged as an expert in the delivery of CVAs for SME companies faced with financial difficulties and is the author of the site www.companyrescue.co.uk.

    Economic recovery? There’s good news and bad news!

    By Julian Donnelly

    6th August 2014

    So, the UK apparently has the fastest growing economy in the G7 and we had 0.8% GDP growth in Q2 2014, so we’re out of the woods from an insolvency perspective? Far from it – let me explain….

    I was recently chewing the fat with an old friend who said “You work in the debt and insolvency industry – bet you’ve been really busy during the last few years”.  Imagine his surprise when I replied “Erm, not really”.

    If you look at long term trends, insolvency runs in cycles which are broadly in line with the economic cycle, but like fiscal policy, there is normally a time lag.

    As the recovery gains pace and we enter the “boom” phase, appetites at the lenders tend to travel up the risk curve. With more and more new business walking through the lenders’ doors and security appreciating in value, balance sheets look stronger and lenders are able to look at a lot more opportunity. As a former banker myself, I have witnessed this first hand.

    This is all very well until the bubble finally bursts as happened in 2008. All of a sudden, there is a jump in non-performing lending due to tougher trading conditions, less business is walking through the doors of the lenders, and security values take a nosedive.  With more stringent capital adequacy requirements, lenders have to re-evaluate their strategy.

    With all of this going on, there is an increase in forbearance (even HMRC in recent years has gotten in on this action with “Time to Pay” arrangements). As long as interest is being covered, lenders are reluctant to take the matter to a formal recovery/insolvency as then that means the loans have to come off the books which weakens their balance sheets further. This is the environment that is the perfect incubator for the so called “zombies” – companies that are barely covering their costs and the interest on their debt.  This is usually the calm before the storm from an insolvency perspective.

    As the recession comes to an end, there is a quiet time while everyone seems to look at each other as if to ask “Is this it? Are we in recovery? Will there be a triple-dip recession?” and so on. As soon as it becomes clear that the recovery is definitely on track and balance sheets are improving and asset values are recovering, the lenders once again turn their eyes to this non-performing debt and sooner or later decide that enough is enough and it’s time to do something about it.

    With interest rates expected to go up by 0.25% as early as November 2014, this will be the very catalyst for a dramatic growth in corporate and personal insolvencies in 2015. Watch this space…

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