The last thing you want for your business is for it to be dragged down by a history of debt. A CVA could be the best option for you to get unhooked from that financial anchor.
Firstly, it’s important to understand exactly what a CVA is and what it does so you can decide if it is the right thing for you.
CVA is a form of composition (an agreement among creditors of a debtor, usually a business), where an insolvency procedure allows a company with debt problems to reach a voluntary agreement with its business creditors regarding repayment of all, or part of its corporate debts over an agreed period of time.
One can be applied for by the agreement of the directors of a company, the legal administrators of a company, or an appointed company liquidator.
A CVA can only be implemented by an insolvency practitioner who will draft a proposal. As long as 75% of the creditors who vote agree then the CVA is accepted. Creditors are also unable to take further legal actions as long as the terms are met.
During the CVA, payments are made once a month. The fees charged by the insolvency practitioner will be deducted from these payments. The company is not required to fund any further costs.
So what exactly are the benefits to you by going through all of this?
- Your company will continue to trade.
- Historic debts will be frozen with no further interest.
- Deferral of payments will ease cash flow pressure.
- The repayment structure of a CVA is flexible so you only pay what you can afford.
- Creditors will have no further enforcement action available.
- No Liquidation or Administration needed.
- Your existing finances can usually be left in place.
Given these benefits, the simple answer is YES, a CVA can save your business. If your company is struggling, it is the perfect solution.
Search online for more information on how to apply for CVA, and secure a debt-free future.
Related posts:
No Responses to Can a Company Voluntary Arrangement save your business?
Add Your Own! Post a Question or Share your Experience.