CVA (Company Voluntary Arrangement) Help & Advice Service

Written by Keith Tully

Is your business having trouble paying bills on time? If you feel this is just a temporary setback and would like to avoid business insolvency or perhaps even bankruptcy, have you considered setting up a payment plan through a Comapny Voluntary Arrangement? 

In today’s economy too many companies are closing up shop because they have gone insolvent or are on the precipice of being bankrupt, but the truth of the matter is, this may be a foolish decision. There ARE solutions to financial problems, even when insolvent, that can save a company which has been viable in the past and can show the potential to be so again. In fact, it is even possible to retain control of your company while corporate debts are sorted out!

Success Is Our Motto 

Keep in mind that Real Business Rescue has saved literally hundreds of companies from winding up or being bankrupt since the recession hit like a nuclear bomb on 23 January, 2009. Tensions were felt long before that throughout the previous year, but officially, that is the date of record. So how did we accomplish this? That’s a very good question and one we are happy to offer advice on, but first we would like you to understand that success is our motivating drive. If Real Business Rescue can’t bring your company back from the brink of ruin, we will tell you so from the very beginning – there are no secrets here! If arrangements can be made with your creditors, we WILL be successful.

CVA: The Most Effective Road to Business Rescue

The single most effective way to save a company from total ruin is through a process called “Company Voluntary Arrangement” or CVA as we like to refer to it in the business. As the name would imply, it is an arrangement entered into voluntarily (not being forced by the courts or creditors) to delay or pay a portion of debt owed and when agreed to by creditors, is a legally binding agreement. But let’s not get ahead of ourselves here as it’s not quite as simple as that.

Intricacies of the CVA Procedure and Process

There is a complete CVA procedure and process which must be followed, to the letter, before any real progress can be made. It isn’t going to happen overnight, and you WILL need to follow the steps outlined by your Real Business Rescue insolvency specialist from our team of expert Insolvency Practitioners (IP). If you want to retain control of your company and continue trading while creditors are dealt with, a CVA can be the perfect solution. Just keep sight of the old cliché, Rome wasn’t built in a day. Your financial problems didn’t crop up overnight but with a little patience and the expertise of Real Business Rescue, a solution can be found.

Settling on a Win-Win Proposition

One thing which should be made perfectly clear is that winding up a company or being declared bankrupt is never in anyone’s best interest. Bankruptcy is usually a lose-lose proposition and what you are looking for as the Director of your company is a win-win solution. Indeed, there are times when bankruptcy may be the only logical alternative, but first it should be determined if there are other, less drastic means which can put your business on the road to recovery. A Company Voluntary Arrangement is a perfect example, but when is a CVA the best option?

The CVA Map Is Outlined for You

Before embarking on a journey into unknown territories, we take out our handy GPS and chart a course. Consider the CVA process as a map to recovery and each of the steps are turns along the way that will lead you to your destination – Business Rescue. Each of these ‘steps’ will also have their own procedures which must be followed, but a very BASIC step-by-step guide would look something like this:

1. A formal appointment letter is sent to an IP
2. IP conducts corporate study of trading accounts and projected cash flow
3. IP drafts proposal which is then sent to Director/s for approval
4. Proposal returned to IP with amendments; final CVA is drafted
5. Signed proposal returned to IP who formally becomes Nominee
6. IP/Nominee makes report to creditors; lodges proposal with courts
7. IP/Nominee arranges creditors meeting; Director/s & IP must attend
8. Proposal is voted on (strict requirements here – see 75% rule)
9. Adjournment for 14 days can be allotted for creditors to make alterations

On the surface this appears to be fairly straightforward, right? Well, most of the time is should be but there are some situations which may need to be overcome. Usually, this is in the form of creditors who aren’t happy to agree to delayed or reduced payments. However, there is good news here which we will get to in a bit. Believe it or not, your company’s salvation can come in the form of the oft feared HMRC!

HMRC to the Rescue!

CVA rules state quite clearly that creditors must be in 75% agreement (the 75% rule) on value of debt owed in order to finalise your company’s CVA proposal. This is where Her Majesty’s government can come to your rescue, more often than you can imagine. Many times the bulk of debt owed will be to HMRC in the form of PAYE, NIC and VAT, especially that which was suspended during the CVA proceedings, sometimes referred to as a CVA hiatus. Government WANTS your business to recover and as creditors, HMRC will be in attendance at the creditors meeting. So, more often than not, with a well-formulated proposal, they will vote in your favour. Imagine that!

Who Benefits by a CVA?

Each of the above steps will be explained in detail information which you can find on the CVA Procedure and Process page, but first it must be determined whether or not a CVA is right for your company. Being insolvent does not exclude a company from a CVA but rather, is when a voluntary arrangement with your creditors will be most beneficial to everyone involved. The primary consideration is ALWAYS your creditors, but then there is of course your company which you want to continue operating, employees who need to keep their jobs and the community which will benefit from continued trading by your company.

Weighing the Advantages & Disadvantages

Understandably, there are CVA advantages & CVA disadvantages which must be analysed, but that is what your IP is there for – to help you weigh the pros and cons of entering into a CVA. Granted, a CVA is not for everyone and there may indeed be companies which will need to file bankruptcy. However, every effort will always be made by Real Business Rescue and Government to help you continue trading if your company can prove past and future viability.

Real Business Rescue is here to help you understand how and when to apply for a CVA and our expert team of insolvency specialists are on hand to answer your questions at any time. Bear in mind that licensed Insolvency Practitioners are bound by statutes and a code of ethics to seek the best solution to your company’s debt problems. With literally hundreds and hundreds of business recovery success stories under our belt, we are confident that our Help & Advice Service can help you find the best debt solutions for your company. If a Company Voluntary Arrangement is the best option, we will not stop until an agreement has been reached – that is our promise to you. Remember, ‘success’ is our motto!

Author: Keith Tully

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