A Company Voluntary Arrangement (”CVA”) is a formal procedure whereby a company struggling to meet its financial obligations comes to an arrangement with its creditors.
This process is used when a company does not wish to cease trading and is of the opinion that it is possible to remain in business and pay its debts back to creditors over a period of time.
Creditors are more likely to agree to a CVA as opposed to seeking a compulsory liquidation of the company if the company can show that the creditor is more likely to get a higher return on the debt owed in the CVA as oppose to any other liquidation procedure.
A proposal would need to be put together and then put forward to creditors for their approval. The proposal must receive approval from at least 75% in value of the creditors for it to become binding. An insolvency practitioner would be appointed to act as the nominee for arrangement and their role will be to review the proposal and prepare reports to the court and to the creditors.
The CVA will come to an end once the proposal has been completed or in the event that it fails and the nominee will notify the registrar of companies either way.
Whether you are considering entering into a CVA or you are an insolvency practitioner charged with overseeing a CVA, our expert and reliable team are here to help.