Company Voluntary Arrangement (CVA)

What is a Company Voluntary Arrangements?
A company voluntary arrangement is a recognised legal procedure; under the provisions of the Insolvency Act of 1986 that enable a company to enter into a binding agreement with its creditors detailing how the company's debts and liabilities will be dealt with; and allows the directors to retain the control of the company.
 
In essence a CVA allows a company with cash flow problems to repay its liabilities; either in part or in full (including the Inland Revenue and VAT) over a period of time usually 2 to 4 years. Once the company's liability has been restructured any monies generated by the company e.g. book debts can be used as working capital rather than paying its old debts.

How is a company voluntary arrangement implemented?
A CVA requires the approval of a majority of 75% of the voting creditors. If approved; the CVA binds all creditors who were sent notice of the meeting irrespective of how they voted.

FAQ's

How much does the company repay its creditors?
Having received the financial position and prospects we would sit down with the company's directors and calculate what the company can afford; typically but not always; on a monthly basis.
 
Will the bank; VAT and the Inland Revenue support the CVA?
In essence a CVA allows a company with cash flow problems to repay its liabilities; either in part or in full (including the Inland Revenue and VAT) over a period of time usually 2 to 4 years. Once the company's liability has been restructured any monies generated by the company e.g. book debts can be used as working capital rather than paying its old debts.
 
In short; we have never had a problem with the above providing the proposal passes the common sense test. As the bank is normally secured ( as are any finance company's); it remains outside the CVA and with all past creditors say; receiving a monthly payment; the pressure is taken off because you have your debtors coming in to the company.

Will suppliers still supply the company?
It is our experience that nearly all suppliers will continue to support a company in a CVA (even though most directors will assure us they will not! please call for a full explanation of this point).

Does anyone interfere with the running of the company during a CVA?
As long as the company adheres to the terms of the CVA; the company is run under the control of the directors without any outside interference.