What is a Company Voluntary Arrangement?
A Company Voluntary Arrangement or CVA is an arrangement entered into voluntarily to defer payment of debts owed often involving a write off of some proportion of the debt by creditors. It is a legally binding agreement which once in place protects your business against further legal action against it provided you adhere to the terms of the CVA.
A CVA allows you to retain control of your company and continue trading safe in the knowledge that your creditors have agreed to give you time to sort our your company’s situation. Putting your company into liquidation may be the right option in some circumstances but if your business is profitable and is worth saving but you have just too many historic problems to over come a CVA may be the best solution.
- An essential first step is to appoint a licensed Insolvency Practitioner to act as “Nominee”
- The Nominee spends time getting to know and understand your business and helps you put together a proposal to tackle your financial problems. This will include a profit and loss and cashflow forecast demonstrating that your business can achieve the repayment plan proposed
- The Nominee writes a report for creditors confirming that he/she has reviewed the proposal and believes it has a realistic chance of success
- All these documents are lodged with the Court
- Creditors are invited to a meeting to decide if they wish to accept the proposal
- Over 75% of creditors who vote must vote in favour for the proposal to be accepted
- If over 75% is achieved all creditors are bound by the terms of the CVA
Lawson Fox has many years experience preparing and implementing CVAs for clients and we have seen numerous businesses succeed with their CVA and achieve the recovery they were looking for.
The CVA provides benefits all round with creditors getting a better return than they would if the company was liquidated, your employees jobs being saved and you get to keep your business and your livelihood.
It is important to understand however that a CVA is only a realistic solution if your business is viable. It is not in anyone’s interests to try to save the company if it is just putting off the inevitable. At Lawson Fox we will take as much time as necessary to make sure we understand your business and its financial position and then give you an honest appraisal of whether the company has the chance to survive and rebuild. For a no obligation discussion or more information on any of the above, call our enquiry team on 0800 085 1706, we’ll be happy to help.
For a no obligation discussion or more information on any of the above, call our enquiry team on 0800 085 1706, we’ll be happy to help.