Company Voluntary Arrangement - Advice for Directors

 

 

 

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Video Script

Company Voluntary Arrangements involve a formal restructuring of company debts to allow a viable business to carry on trading. There are firm eligibility requirements for CVAs, the main condition being that the company is viable for the future.

This video discusses how Company Voluntary Arrangements work, the eligibility criteria, and what happens if they fail.

If your company is experiencing severe financial decline, but your financial problems are deemed temporary by a licensed insolvency practitioner (IP), you may be able to enter into a Company Voluntary Arrangement.

CVAs are legally binding on all parties and typically last from one year to five years depending on how much debt the business is carrying. As it is a formal insolvency procedure a licensed IP must be appointed, and they negotiate with creditors on the company’s behalf.

This video explains how the CVA mechanism works, and the fact that it benefits both the company and its creditors. A key issue is that the proposed repayment plan must be affordable for the duration of the agreement, so the chances of failure are reduced.

If a Company Voluntary Arrangement does fail, it may be possible to renegotiate the repayment amount or timescale to repay. If not, and the arrangement is cancelled, your company is likely to be forcibly closed down by a creditor via a winding up petition.

Any debts remaining at the end of the term are written off. Your company’s credit rating will be adversely affected but you can continue trading free of burdensome debt levels, and no longer have to make the monthly payment towards the CVA.

For professional guidance on Company Voluntary Arrangements, visit www.realbusinessrescue.co.uk