A Company Voluntary Arrangement (CVA) can provide viable businesses with the chance to recover by reorganising or restructuring themselves.
It’s a legally binding agreement between a business and its creditors which clearly states how pre-existing debts will be repaid – usually for a percentage of their value.
A company’s directors work with their insolvency practitioners to propose the arrangement, which is filed at court, and put before unsecured creditors for approval.
However, until the CVA takes effect a company will be unable to prevent creditors from enforcing their rights unless additional protection is sought from the court.
“Depending on its complexity, a CVA can be less expensive than other insolvency procedures. Because of the intricacies that are frequently present, the decision to use a CVA – and its implementation – should only be handled by experienced insolvency practitioners.”
Daniel Richardson, Partner – CG&Co
