Company Voluntary Arrangements (CVA)
Our experienced team of insolvency practitioners are here to guide you through the intricacies of a CVA, helping you make informed decisions that could save your business from insolvency.
What is a Company Voluntary Arrangement (CVA)
A Company Voluntary Arrangement (CVA) is a legally binding agreement between a financially distressed company and its creditors. It provides a structured framework for the company to repay its debts over a defined period while continuing its operations.
CVAs are a proactive alternative to liquidation or bankruptcy, allowing businesses to restructure their debts and regain control of their financial situation.
Benefits of a CVA
Unlike liquidation, a CVA allows your company to remain operational while repaying debts. This continuity helps preserve your brand, relationships, and workforce.
CVAs demonstrate your commitment to repaying creditors, which often results in better cooperation. Creditors are more likely to support a CVA if they believe they will recover a higher portion of their debt compared to other insolvency procedures.
Through negotiations with creditors, a CVA may lead to a reduction in the total debt amount, making it more manageable for your company to repay over time.
Opting for a CVA showcases your dedication to addressing financial challenges responsibly, potentially restoring stakeholder and investor confidence.
Once approved, a CVA legally protects your company from further creditor actions, giving you the breathing space needed to implement recovery strategies.
The CVA Process
Assessment: Our expert insolvency practitioners conduct a comprehensive assessment of your company’s financial situation, exploring the feasibility of a CVA as a suitable solution.
Proposal Development: We work closely with you to develop a robust CVA proposal that outlines how debts will be repaid, usually over three to five years. This proposal is then presented to creditors for approval.
Creditor Negotiations: Our skilled negotiators engage with creditors to secure their buy-in to the CVA. This involves showcasing the potential for improved repayment compared to other insolvency methods.
Creditors’ Meeting: A formal meeting is held where creditors vote on the proposed CVA. With our guidance, your company aims to attain the required majority vote for the CVA to be approved.
Implementation: Upon approval, the CVA is implemented, and your company starts making repayments according to the agreed-upon terms. Our ongoing support ensures the smooth execution of the arrangement.
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A Company Voluntary Arrangement (CVA) is a formal agreement between a financially struggling company and its creditors. It provides a structured plan for repaying debts over an agreed period, allowing the business to continue operations and potentially avoid insolvency.
Unlike liquidation or bankruptcy, where the company’s assets are sold to repay creditors, a CVA allows the business to operate while repaying its debts over time. This offers a chance for recovery and continuity rather than immediate closure.
Most companies facing financial distress can consider a CVA, regardless of size or industry. However, the company’s financial situation and feasibility of repayment play a crucial role in determining whether a CVA is a suitable solution.
A CVA offers several benefits, including business continuity, reduced debt burden, improved creditor cooperation, potential stakeholder confidence, and legal protection against creditor actions.
A CVA usually lasts between three to five years, depending on the terms negotiated between the company and its creditors. This duration allows for the repayment of debts while the company continues its operations.
CVA proposals are developed in collaboration with insolvency practitioners. They assess the company’s financial situation, work with company management to devise a repayment plan, and present this plan to creditors for approval.
The creditors’ meeting is a formal gathering where creditors vote on whether to approve the proposed CVA. For the CVA to be accepted, a predefined majority of creditors, typically 75% by value of the debt, must vote in favour.
Yes, once the CVA is approved, the company is legally protected from creditor actions, such as winding-up petitions or legal proceedings related to the debts covered by the CVA.
Yes, secured creditors can be included in a CVA. However, their approval is crucial, and their rights must be considered during the negotiation process.
Contact our experts, they will guide you through the initial assessment and provide you with a clear understanding of the CVA process and its potential benefits.
Speak to an expert
When financial challenges threaten the existence of your company, a Company Voluntary Arrangement (CVA) could be the lifeline you need. At Xeinadin, we’re committed to providing you with strategic guidance, expert negotiations, and a tailor-made approach to help your business regain its financial footing.
Contact us today to explore how a CVA could be the smart solution to your financial struggles.
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