Company Voluntary Arrangements

Company Voluntary Arrangements (“CVA”)

A CVA is an agreement between an insolvent company and its creditors to pay back a proportion of its liabilities over a period of time.

This is a method of consolidating debt and reaching an agreement over how much and when it will be paid. These payments are typically on a monthly basis. They can also start relatively low and increase in terms of amounts later on, after the Company has had a chance to get back onto its feet.

CVAs have benefits to all parties, enabling a Company an opportunity to improve cash flow in order to trade whilst seeking to ensure that creditors receive all or a proportion of their liabilities.

How Does A CVA Work?

The pre-requisite for a CVA is that the Company is insolvent. Insolvency can either be inadequate cash flow or when a Company’s assets are less than its liabilities. If this has been established, and on the basis that the advice subsequently provided by a professional Insolvency Practitioner is that the CVA is a viable option, the following process is invoked:

• The Board confirms that a CVA should be proposed;
• A CVA proposal is drafted;
• The proposal is viewed by a Nominee (an Insolvency Practitioner, usually the same person that helped draft the proposal);
• A report on the proposed CVA is prepared by the Nominee and submitted to the Court;
• The CVA Proposal is circulated to shareholders and the creditors, providing details of when meetings for both parties will be taking place for them to accept or reject the proposals; and
• The CVA proposal is voted upon by shareholders and creditors, at their respective meetings.

If the CVA proposal is accepted by the required majority of creditors, then the Supervisor (who is usually the person who acted as Nominee) implements the CVA in accordance with its terms. If rejected by creditors, then the Company must consider alternative options.

How can SFP Group Assist with a CVA?

• You will have immediate access to professional award winning advice;
• We can determine whether or not a CVA is appropriate in your circumstances and if not, recommend and provide alternative options;
• Assist with drafting the CVA proposal to circulate to your company’s shareholders / creditors;
• Supervise an approved CVA; and
• We could save jobs and help you back on your feet.

Seek professional help as soon as possible

No matter what the reason, if you are experiencing financial difficulties the key is to seek early professional advice.

The SFP Group has been voted the best business recovery specialists in the UK by the Business Moneyfacts Awards over the past 5 years and are experts at helping you find a solution which works. Fill in our call back form or call us now on 020 7538 2222.