CVA

A company voluntary arrangement (CVA) is a rescue process which is in effect a deal between the company and its creditors in satisfaction of its debts.

It enables a company that is insolvent to stay in business, continue to trade and save jobs.

A CVA proposal is prepared with the assistance of a Licensed Insolvency Practitioner and the directors of the company will propose what is to be paid based on the company’s ability to pay, either by the realisation of assets, monthly contributions, a third party lump sum or a combination of all these. The company may also go through a restructuring process within the proposal to ensure that it returns to profitability. Creditors can then either accept or reject the proposal and if the required majority of creditors accept the proposal is binding on all creditors even if they voted against it. The company is then free to continue trading without the threat of closure and liquidation.

The Licensed Insolvency Practitioner will then ensure that the company honours what the proposal contained. The directors maintain control of the company and following the successful conclusion of the CVA the company is released from its outstanding debtors and is free to move forward and prosper.