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Who Can Benefit From A Company voluntary arrangement (CVA)?

• Companies that have experienced trading difficulties since start up and need time to improve their business model.
• Companies that want to avoid the stigma of liquidation.
• Companies that have an underlying good business but have been adversely affected by an unusual event such as their major customer has gone out of business.
• A Company that needs to restructure.
• Companies that wish to wind down trading in an orderly fashion

What are The Advantages of Company voluntary arrangement (CVA).

• A Company voluntary arrangement (CVA) avoids the need for the Licensed Insolvency Practitioner to report on the conduct of the directors to the submit a report to the Directors Disqualification Unit of the Department for Business, Enterprise & Regulatory Reform (BERR).
• A Company voluntary arrangement (CVA) costs less that other more serious insolvency procedures such as receivership or administration.
• The government, banks and large creditors are keen on promoting the "rescue culture" and so they are generally prepared to work with troubled businesses to save them.
• Company voluntary arrangements allow structured payment of crown tax arrears.
• A Company voluntary arrangement (CVA) is legally binding.
• A Company voluntary arrangement (CVA) allow the core business to trade on and so then provides the company directors with continued income.
• A Company voluntary arrangement (CVA) provides the company with breathing space so the company can facilitate the rescue procedure.
• A Company voluntary arrangement (CVA) allows the directorâ??s time to reorganise and restructure the company without the threat of creditor action.

If we propose a CVA what will HMRC do?

HMRC has a duty to consider the deal and the normal process is for the turnaround practitioner to call the HMRC/IR and say a CVA is being prepared. The collector or debt recovery unit will then pass the file to the central voluntary arrangement department in Worthing. They will consider the document and vote accordingly.

What happens to my Personal Guarantees if we propose a CVA?

They are guarantees that cannot be removed unless and until the debt is paid off. The longer term repayment to secured creditors should be considered as part of the overall restructuring. Once the debt is cleared there is no reason why PG's cannot be removed.

Is it expensive? How do we pay the cost of a CVA?

In comparison to other forms of insolvency it is not expensive. Individual circumstances determine the costs; but do speak to a turnaround practitioner or an insolvency practitioner about this area. Because payments to the Crown and other non essential creditors are suspended whilst putting the deal together, cashflow often improves allowing payment. However, many IP's and practitioners will consider spreading the cost of their work to match cashflow ability.