• Home
  • About Us
    • Our fees and charges
    • Terms of Business
    • Complaints procedure
    • Agreement to Mediate
    • Team
    • Privacy Policy
  • Consultation
  • Solutions
    • Insolvency Support
    • Negotiated Settlements
    • Personal Bankruptcy Experts
    • Mediation
    • Comparison of Solutions
  • Case Studies
  • Testimonials
  • Blog & News
    • Press & Awards
  • Links
  • Contact us
  • Home
  • About Us
    • Our fees and charges
    • Terms of Business
    • Complaints procedure
    • Agreement to Mediate
    • Team
    • Privacy Policy
  • Consultation
  • Solutions
    • Insolvency Support
    • Negotiated Settlements
    • Personal Bankruptcy Experts
    • Mediation
    • Comparison of Solutions
  • Case Studies
  • Testimonials
  • Blog & News
    • Press & Awards
  • Links
  • Contact us

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.

Please be advised that all views expressed in these posts are those of the author and not of James Rosa Associates ltd.

Categories

  • Bankruptcy (45)
  • Case Study (6)
  • Economy (13)
  • Events (16)
  • Finance (38)
  • Guest (14)
  • Insolvency (63)
  • Mediation (7)
  • Mr Bankruptcy (49)
  • Newsletter (9)
  • Other (11)
  • Personal Guarantees (5)
  • Press Release (12)
  • Turnaround (5)

Recent posts

  • Why do people choose mediation to resolve debts?
  • Developing good financial habits to tackle debt
  • What is the current situation for debt in UK?
  • Using personal experience to help mediate people out of debt
  • Could you spend less this Christmas?

Archives

  • February 2021 (2)
  • January 2021 (2)
  • December 2020 (1)
  • November 2020 (2)
  • October 2020 (2)
  • September 2020 (2)
  • August 2020 (2)
  • July 2020 (2)
  • June 2020 (2)
  • May 2020 (2)
  • April 2020 (3)
  • March 2020 (3)
  • February 2020 (2)
  • January 2020 (1)
  • December 2019 (3)
  • November 2019 (1)
  • October 2019 (2)
  • September 2019 (1)
  • August 2019 (3)
  • July 2019 (2)
  • June 2019 (3)
  • May 2019 (2)
  • April 2019 (1)
  • March 2019 (2)
  • February 2019 (1)
  • January 2019 (1)
  • December 2018 (2)
  • November 2018 (1)
  • September 2018 (2)
  • July 2018 (1)
  • March 2018 (1)
  • January 2018 (1)
  • May 2017 (1)
  • January 2017 (1)
  • December 2016 (1)
  • November 2016 (1)
  • September 2016 (2)
  • August 2016 (2)
  • July 2016 (1)
  • May 2016 (2)
  • March 2016 (2)
  • February 2016 (1)
  • January 2016 (1)
  • October 2015 (2)
  • September 2015 (2)
  • August 2015 (3)
  • July 2015 (3)
  • May 2015 (1)
  • April 2015 (1)
  • March 2015 (2)
  • February 2015 (1)
  • January 2015 (2)
  • December 2014 (1)
  • November 2014 (2)
  • October 2014 (5)
  • September 2014 (3)
  • August 2014 (3)
  • July 2014 (1)
  • April 2014 (3)

RSS FT News Feed

  • Nasdaq futures and Treasury prices slide on stimulus progress
  • Britain’s house price boom is not too big to fail
  • Agnelli family buys 24 per cent stake in Christian Louboutin
  • Royals nearly drove me to suicide, Meghan Markle tells Oprah Winfrey
  • UK confidence picks up to highest level since start of pandemic

Sign up to our newsletter

Useful links

  • Home
  • About us
  • Consultation
  • Blog & News
  • Press
  • Contact us

Solutions

  • Insolvency Support
  • Mediation
  • Negotiated Settlements
  • Personal Bankruptcy Experts

Social

  • Facebook
  • Twitter
  • LinkedIn

The Old Rectory Business Centre
Springhead Road
Northfleet
Kent
DA11 8HN

T: 0845 680 7217
F: 0871 714 3073
E: enquiries@jamesrosa.co.uk

© 2018 James Rosa Associates Ltd. All rights reserved.