Company Voluntary Arrangements (CVA's) - Explained
Company Voluntary Arrangements can seem complex, but they are really quite straightforward, below are CVAs explained.
There is legislation that enables a company to make a private arrangement with all its unsecured creditors. The Company Voluntary Agreement procedure was introduced by the Insolvency Act 1986 "IA86" and is simply a formal mechanism which permits a company, which has debt problems, to reach a compromise with its creditors on the repayment of its debt.
Imagine if your company could
- Freeze the company's debt and any interest charges
- Repay the debt in affordable monthly installments
- Prevent creditors from taking further action against your company
- Write off a proportion of the company's debts with creditors' consent
Well a Company Voluntary Agreement could allow your company to do this.
The CVA can be tailored to suit the company's and creditors' needs. It could involve a five year payment plan or a full and final settlement in the form of a lump sum to creditors or a combination of the two.
The Company Voluntary Agreement avoids the need for liquidation, can save jobs and investments. A further advantage is that the Supervisor is not required to investigate the directors' conduct nor submit reports to the Dti as in liquidation. However, if the directors' conduct has been severely lacking, the Supervisor will need to advise creditors of this and this could effect creditors desire to support the CVA.
The Next Step
The options for a financially distressed business need to be very carefully considered. If you need more information on Comapny Voluntary Agreements then simply forward your details on our Contact Form and we will contact you. Alternatively ring us on our FREE ADVICE LINE 0800 781 0990.
All debt solutions should be very carefully considered. Fees will be charged if a solution is taken in order for us to advise and administer the most appropriate action - all fees will be outlined during your consultation. Retained payment may place you further into arrears. The Business Debt Advisor complies with the Consumer Credit Act and you have the right to a cooling off period of 14 days. It is likely that your ability to obtain further credit in the short term will be affected and this may also be the case over the medium to long term.
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