What are the advantages of a Company Voluntary Arrangement (CVA)

15 June 2014

A CVA proposal is drafted by the directors with the assistance of an Insolvency practitioner, known as the “nominee” The proposals are then sent to the stakeholders giving them 14 days notice of the CVA creditors meeting:

What makes a successful Company Voluntary Arrangement (CVA):

- The business must be viable for a CVA to work.
- The Directors must be honest about the company’s affairs and show the true financial position.
- A CVA must offer the Creditors more money than would be received if the company went into liquidation.
- The company must have sufficient working capital to trade and pay day to day expenses and at least be trading at breakeven.
- The company should have a full order book or some business in the pipeline.

What are the advantages of a Company Voluntary Arrangement (CVA):

- A CVA is a cost effective method for avoiding outright insolvency for a company with financial problems.
- A CVA is legally binding.
- A CVA allows the Directors time to reorganise and restructure the company without the threat of creditor action.
- A CVA is a private matter and does not appear in the papers, so avoiding negative local publicity.
- A CVA allows structured payment of Crown tax arrears.
- A CVA avoids the need for the Insolvency Practitioner to investigate the affairs of the company and report on the conduct of the Directors.
- A CVA allows the Directors to remain in control of the company.

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