A Company Voluntary Arrangement can be proposed by the directors of a company registered in England and Wales, the designated members of an LLP.
Is my company eligible for a CVA?
Whilst a CVA may seem appealing, your company must be eligible to make a Proposal to its creditors and there are three key factors to consider:
- Is your company insolvent?
- Is your company capable of being rescued?
- Can your company afford to make one, monthly consolidated repayment?
How will a CVA help my company?
There are many benefits to a CVA but the main one is the rescue of your company and the avoidance of Liquidation. Other benefits include:
- Saves jobs
- Directors retain the day to day control of the company
- Consolidated debt
- Creditor pressure subsides providing breathing space to restructure and make changes
- Protection from legal action including HM Revenue & Customs
- Limits adverse publicity
- Provides a mutually beneficial deal to both the creditors and the company
- Typically reduces total debt
Initial consultation and face to face meeting
The first step is to contact a qualified Insolvency Practitioner (IP) to discuss the affairs of your company and the problems it is facing. An IP is duty bound to consider all available options available before determining whether or not a CVA is appropriate. To talk to the team please contact us on 08000 724 558 to arrange a free and confidential meeting at a location to be determined by you.
Engage a qualified and licensed Insolvency Practitioner
In circumstances where a CVA is recommended and you choose to proceed you will need to formally engage an Insolvency Practitioner to draft the deal to be put to your creditors and to liaise with them. Once formally instructed the IP and his staff will take the pressure off you by dealing with pressing creditors.
A CVA predominantly lasts for a period of five years / 60 months, unless the monthly contributions into the CVA would facilitate a payment in full, including interest, in a shorter period of time. It is also possible to propose a shorter period of time to your creditors but most typically tend to be for between three to five years.
The IP and his staff will begin to draft a proposed deal to the company’s creditors and obtain from the Directors any additional information they may require. The Proposal must strike a balance and be fit, fair and feasible with a reasonable prospect of implementation. If at any point during the process directors feel that the company will not be able to adhere to the terms being proposed, then a Creditors Voluntary Liquidation may be more appropriate.
Filed at Court
Once the Proposal has been agreed by the directors it is filed at court and is binding on all creditors. If you think that a CVA may be beneficial to your company or you require further information then please contact us on 08000 724 558 to speak to one of our expert team.