Company Voluntary Arrangement (CVA)

A CVA will allow you to reduce creditor payments and write off debt so your company can trade back into profitability

• Company debt written off
• No upfront investment required
• Winding up petitions and other legal action stopped

If your company is suffering serious financial difficulties or you have been threatened with a winding up order -
find out how a CVA can save your company

Where to start

• Check if you qualify – use the Solution Calculator to get a FREE REPORT
• Call us NOW so that one of our experts can help you start the rescue

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What happens to Directors

Directors remain in their positions

If a Company Voluntary Arrangement is implemented, it is likely that the company directors will remain in their posts and continue to carry out their roles.

However, if there is a need for the company to be restructured so that its ability to trade is improved, certain directors may be asked to change their roles or leave the business all together.

One of the risks of undertaking a CVA is that the management team does not change and so continue to make the same mistakes as they have done in the past. As such, it is often advisable to introduce new people to the team. This could be in the form of a new director or consultants.

No director's disqualification report

Because a CVA does not involve the winding up of the company, there is no liquidator appointed and the directors are not investigated for wrongful trading.

This is a significant advantage for directors where there is a possibility that they have acted improperly and wish to avoid prospect of being investigated further by the insolvency service.

What happens to Employees

Employees remain in their positions

The objective of a Company Voluntary Arrangement is to allow a company to continue to trade without the burden of historical debt. As such, the arrangement is put in place without disruption to the organisation or its people.

Contracts are not changed and employees continue to operate as before.

Jobs may be at risk as a result of restructuring

The only time when employees positions may be at risk as the result of a CVA is if the company needs to be restructured so that it is better able to compete in its market. The company may decide that change is needed to ensure that it is in the best possible position when the CVA is completed.

If as a result of this restructuring, any employees are to lose their jobs, the company must follow the standard redundancy procedures to ensure that employees are properly compensated.

What happens to Creditors

Receive less than they are owed

As a result of a Company Voluntary Arrangement, creditors will generally receive far less than the total they are owed. Their return could be less than 50% of the total debt.

However, it must not be forgotten, that if a CVA is not agreed, the alternative could be that the directors then have no choice than to put into administration or liquidation. If this were to happen, the creditors should expect a far lower return than that which would be delivered by the CVA.

Creditors can reject the proposal

It is worth noting that the only way that a CVA can be implemented is if a majority of 75% of the value of creditors who vote, agree to the arrangement. As such, creditors have an opportunity to reject the company's CVA proposal.

What will a Company Voluntary Arrangement cost?

No upfront investment

Unlike other business rescue solutions such as pre pack administration, a Company Voluntary Arrangement does not require a significant lump sum for it to be implemented.

The costs of the arrangement (fees paid to an insolvency practitioner) are deducted from the agreed monthly payments which the company makes towards its creditors. No additional fees are required to be paid on top.

Drafting Fee

Depending on the complexity of the situation, an initial drafting fee may be charged to pay for the time spent analysing the company's financial position and presenting the information so that it can be used in the CVA proposal process.

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