Payment plans. A Company Voluntary Arrangement CVA could be the answer
- Ensure your business can continue to trade
- Stop pressure from creditors and prevent county court judgments, writs and winding up proceedings
- Ensure any remaining unsecured debts are written off at the end of the CVA
- Improve your cash flow
- Ensure your debts are consolidated into one affordable monthly payment which we manage on your behalf
What are the main benefits of a Company Voluntary Arrangement (CVA)?
- The Directors remain in control of the business
- Lease and employee obligations can be renegotiated.
- Fees are often lower than an Administration or Liquidation
- It can be implemented quickly so that you can focus on getting your business back to profitability
- A CVA can help in cases where the company needs to restructure
- Legal action such as county court judgments and winding up petitions cannot be pursued.
- Your business will become more financially stable with an improved positive cash flow
- A CVA can help in cases where directors have been unable to negotiate repayment plans with your creditors and HMRC.
- Once the CVA has been successfully completed, any outstanding unsecured debt is written off, including HMRC
What is a CVA?
A Company Voluntary Arrangement, or CVA was introduced by the government to provide an alternative option to companies who are facing Compulsory or Voluntary Liquidation. A CVA is used as a rescue tool which allows you to repay your creditor debt whilst still continuing to trade and is supervised by a Licensed Insolvency Practitioner (The Supervisor).
It will help to improve cash flow and reduce your debt levels and in most cases, the company will make a single, affordable payment to the Supervisor. The Supervisor will then distribute this payment on a pro rata basis amongst all unsecured Creditors that have been included in the CVA. The CVA is usually agreed over a period of up to five years and the amount you repay can vary from repayment in full to just a small percentage of the overall debt. At the end of the term, once the CVA has been completed, any outstanding debts will be written off, allowing you to wipe the slate clean. During the CVA, your creditors cannot take action against the company in respect of the CVA debt.
CVAs are designed to be relatively flexible in order to help struggling business. Therefore, if your situation changes and you are struggling to make the payments in your CVA proposal, a variation to the CVA can be put forward to your Creditors for approval.This may be reducing your monthly payment, giving you a payment holiday or any other sensible term that will help your business and the CVA continue successfully.
What are the disadvantages of a CVA?
- During the CVA you may find it difficult to obtain credit for the company. Also, any existing bank debt such as an overdraft or loan may have to be restructured. We work with commercial finance brokers that specialise in sourcing finance for companies who are struggling financially or which are in a CVA.
- If you cannot keep up your monthly repayments and do not attempt to vary the terms of the CVA, the CVA may fail, which may lead to the business ceasing to trade and the company entering liquidation. If this occurs, we will still help you exit the business in an orderly manner.
- The CVA will be public record at Companies House
What is the process of a CVA?
The first step is to arrange your free, no obligation consultation with one of our experienced team who will determine if a CVA is a viable option based on the financial position of the company.
In cases where a CVA is appropriate, we will explain the procedure to you in detail and will answer any questions you may have in order for you to make an informed decision.
Should you choose to instruct us, we will ask you for some detailed information that will enable us to draft a proposal which is put forward to your creditors.
Next, we will a call a meeting of your creditors who will have the opportunity to ask any questions about the proposal or suggest amendments if they would like to. In order for the CVA to be approved, 75% of your creditors (by value of sums owed, of those that vote) must agree to the proposal.
Assuming your creditors agree to the proposal, the terms of the CVA will be implemented and you will start to pay your affordable monthly payment to your Supervisor who will then distribute this to your creditors on your behalf. At the end of the term of your CVA, all outstanding unsecured debts are written off.
Why use Leading Corporate Recovery?
Our team are always on hand to guide you every step of the way
We understand that you may need advice quickly. That’s why our team of experts are available by email or telephone outside of standard office hours in order to provide an efficient service without compromising quality. Additionally, we know that keeping your business running is always a priority which is why we are happy to meet with you out of hours in the evening or at weekends.
Our team are empathetic and non-judgemental
We know that it can be difficult to discuss the challenges your business has faced and that coming to terms with your current financial position can be daunting. That is why our team of experts will take the time to listen without judgement in order to help you find the best way forward for your business. Our team are empathetic, discrete and will always ensure you are fully aware of all of the options available to you.
We offer flexible payment plans
We appreciate that many of our corporate clients are already strapped for cash. That’s why we always provide a free, no obligation consultation to discuss your options and if you would like us to act for you, we are always prepared to agree a flexible payment plan.