Company Voluntary Arrangement (CVA)
A Company Voluntary Arrangement (known as a CVA) is a procedure which enables a company to enter into a binding agreement with its creditors about how its debt repaid. The CVA may provide for full or partial repayment depending on what the company can afford to pay based on its cash flow forecasts.
If you require help with arranging your voluntary agreement then we would like to hear from you. Please either fill in our online contact form or if you wish to speak to someone you can call us on 0844 704 8907.
Do All Creditors Have To Agree to the CVA?
A CVA can only be proposed by a company if it is insolvent. The CVA requires the approval of 75% of creditors who vote. Once approved, the CVA is binding on all creditors irrespective of how they voted.
Any secured creditors are typically excluded from the CVA as their debt is subject to security and is also usually required for the business to continue to trade. This would typically include bank overdraft facilities and factoring agreements.By entering into a Company Voluntary Arrangement, the directors are able to retain control of the company as it can continue to trade as a going concern. A CVA also usually provides for a much better return to creditors than in liquidation and as such is often a more appealing solution to all parties.
In order for a CVA to be successfully implemented, the company must produce the following:
- Cash flow forecasts which evidence that a surplus will be available from which ongoing contributions can be made
- Production of a business plan which evidences that appropriate changes have been made to return the company to profitability
These will then form the basis of the company's proposals to creditors.
Contact Us Today
Here at Baines & Ernst we are experienced in dealing with company voluntary arrangements. Please contact us today using our contact form or call us on 0844 704 8907 to see how we can help.