What is CVA?

Do you own a company in UK in deep debt? A CVA or Company Voluntary Arrangement UK is an arrangement that can help your firm to pay off all its debt.

What is CVA (Company Voluntary Arrangement)? Is a legal procedure in which you and your Creditors reach an agreement on paying your Creditors all or parts of what you owe. This agreement is binding and can only be made by the owner or directors of the company. Before a proposal is agreed upon, a moratorium is made to the courts which will prevent your Creditors from taken legal action against your company for 28 days.

This arrangement cannot be proposed by your Creditors but by the company only. Once your Practitioner has submitted the proposal, your Creditors then agree the proposal on. While you are paying the debt off, your company can still operate and conduct business.

Who can benefit from it? - How to make it successful?

  • Companies that do not want to liquidate.
  • Companies that have a good relationship with their suppliers. In order for the Company Voluntary Arrangement to work and get the results needed, you must be honest about the company’s funds.
  • Your company must be viable.
  • Make payments as scheduled.

These are the advantages of using a Company Voluntary Arrangement in UK:

  • Gives your company more time to pay the debt back.
  • Creditors are much more glad to work with you.
  • Avoids you from filing Bankruptcy.
  • Legally binding.
  • Allows time for your company to recover.
  • Keeps Creditors from taking further legal actions.
  • It could cost less than other procedures.
  • Information is kept private.
  • No investigation of the Company.
  • If you have Creditors that are taking action against you through the Courts these actions will be stopped once the CVA has started.

Company Voluntary Arrangement FAQs

What does insolvency mean?

It means that your company is unable to pay your debt as planned with your Creditors. Your company can try to borrow more money but this won’t solve the problem. This will only put your firm further in debt. If you feel that your company is failing in this situation, you need to find an organization that can give professional advice.

Is a CVA the right choice?

Are you willing to pay the debt back? Does your company have good relation with its suppliers? Do you want to keep your Customers? Can you still make a profit? If you answered yes to these questions than a Company Voluntary Arrangement could be the right choice for your firm.

With the CVA you will have to make your payments on time and make a profit as well. When you are completely finished with the CVA, you will be able to build your credit rating again.

The alternative to a CVA is Bankruptcy; in this case you could lose your company completely.
With a CVA you have a chance to repay at least 50% of your debt and still continue with your organization making a profit.

You should definitely talk with a certificated Insolvency Practitioner before going for a CVA. Only a professional advisor can help you to understand your available options and the legal implications for each type.

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