Corporate Voluntary Arrangements

A Corporate Voluntary Arrangement (CVA) is a legally binding arrangement between a company and its creditors for full or part repayment of the company’s debt, over a period of time.

If a company has a viable future, but current cash flow problems have resulted in mounting pressure, a CVA may be a good solution not only for the company but also for creditors.

Key Benefits
  • Enables the company to continue in business with a view to improving the position of the creditors;
  • Stops court action and winding up procedures;
  • Eases cash flow pressures;
  • Directors are allowed to remain;
  • Greater flexibility allowed to ensure that the return to creditors is maximized;

Simply contact us for free, no obligation advice. Our team of professional and friendly advisors will assist you through the CVA process step by step.

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FAQs

It could be a combination of capital injection and asset realization or monthly contributions. Once a pool of funds is available, it gets distributed to creditors.

Yes, once the CVA is in place no enforcement action can be taken by pre-CVA creditors.

Every CVA is different and a sensible time frame should be set.

Something is better than nothing. Remember, any proposals made to creditors must represent the company’s best efforts to compensate its creditors and ultimately need to be supported by a business forecast.

With the support of the company’s members and creditors, it should be remembered a CVA is made to the company, not by the company.

The existing Directors and management.

It depends on the urgency of a case, but we would estimate 28 days to be the average time.

A provision in the terms of the CVA would provide depending on circumstances some leeway or modifications could be proposed, if these fail then the company will have to enter into Liquidation

Secured creditors usually will not vote in a CVA. Be that as it may, it is absolutely vital that any CVA proposals are discussed with them in advance. They will need to be comfortable with the CVA otherwise they retain the right to appoint a receiver and manager. Remember, secured lenders prefer a solution not a problem.
No CVA can be structured in any way if it prejudices secured creditors’ rights.

Preferential creditors will need to be paid in full before any contributions can be made to the unsecured creditors. No proposal for a CVA can incorporate conditions compromising preferential creditors’ statutory rights.

Not always.
It will depend on the construction and the amount of pre-planning and in some cases a little bit of luck.