A CVA leads to a legally binding agreement with the company’s creditors to allow an amount of its debt to be paid back over time. In order for a CVA to be approved 75% of creditors, who had voted, should support the proposal. 
CVA (Company Voluntary Arrangements) is the best tool for a company that has serious debt issues but wishes to avoid insolvency/liquidation. The CVA is implemented under the supervision of an insolvency practitioner. A CVA is effected when the creditors and the shareholders have approved it. If there is a difference of opinion between the shareholders & creditors, then the decision or the opinion of the creditors will prevail subject to a court order. 
The following can propose a CVA:- 
1. Company’s Directors 
2. Administrators 
3. Liquidator 
These are the people who can propose the company & its creditors for a CVA or the Company Voluntary Arrangements. 
With a CVA the debts of the company can be paid off from future profits over a timeframe that is set plus the business can continue to trade. A CVA enables a company to restructure and re-evaluate the business or organization and also helps to create better structures & strategies. It is also a requirement that the director(s) of the company remain in control. 
Avoiding publicity is the most beneficial tool for the company as it helps to keep the reputation intact without causing unnecessary issues for creditors. It is important to inform the creditors & trade suppliers prior to entering the CVA as it builds a trusting relationship and continuous workflow. 
There are different stages of a CVA. They are as follows: 
1. Following a formal decision made by the directors to enter this route out of administration, an expert insolvency practitioner (IP) is appointed to set up the agreement. 
2. The IP undertakes a full audit of the organization's financial position and structure to create a draft proposal. Up to a five year business plan is prepared which helps banks and other creditors to decide whether or not to support the CVA. 
3. Directors inform the secured creditors of how their debts will be repaid over a given time. 
4. The proposal is then sent to court for processing. The application is then sent to the company’s creditors for approval 
5. The Creditors have 14 days to can consider the application and make their decision to support it or not. Normally a longer timeframe is regularly given to allow HMRC and other principal creditors the time they need to address any issues. 
6. Interest and charges on all obligations are frozen, and reimbursements are made as set out in the CVA. 
There are a number of benefits to a CVA (Company Voluntary Arrangements) including the ability of the company to continue to trade and settle some or all of its outstanding debts. 
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