Company Voluntary Arrangement
A Company Voluntary Arrangement, also known as a CVA, is a formal, legally binding agreement which is lodged at court, between a company and its creditors, to assist companies to carry on trading when in financial difficulties. A CVA allows the company to repay a fixed amount in monthly instalments, generally over a period of 5 years, and once the end of the term is reached any outstanding debt is automatically written off. Creditors vote on the CVA proposal usually at a virtual meeting and decide whether to approve the CVA. This approach allows the company to continue trading and pay creditors what it can afford, rather than Liquidation which could possibly return a much lower payment in the pound, if anything at all.
After initial discussions you will be sent a questionnaire which has to be completed to enable us to proceed. There will be someone on hand to assist and take you through the process. The completed questionnaire will enable us to assist you with the preparation of the proposal. This is initially sent to the directors of the company for agreement and signature, once agreed it is lodged at court. A decision process is decided upon and usually a virtual creditors meeting is convened and held. All of the company’s creditors receive a copy of the proposal and they vote to either approve with or without modifications or reject at a meeting of creditors. If approved by 75% of those voting, the company enters into a CVA and agrees to pay the monthly sum for the period specified. Effectively, a line has been drawn under all of the company’s historic debts, allowing the company to trade on under the responsibility of the director(s). All future debts will be paid as and when they fall due.
If you have any questions or require further information about the services we offer, please contact us on 01302 342875.