0800 313 4331 consult@interco.com

Company Voluntary
Arrangement

CVA

CVAInsolvency Solutions CVA

Company Voluntary Arrangement

 

TO DO?…OR NOT TO DO?

A Company Voluntary Arrangement (CVA) can sometimes offer a positive alternative to Creditors Voluntary Liquidation (CVL). The strong upside is to let the Company reduce or defer most of its debts and continue to trade without interruption. Some downsides are delay with proposals that may be rejected, still having large liabilities and debt payments, being accountable to Creditors via a Supervisor and having to trade with a high risk Credit Profile.

Which is the best route for you ?

If you wish to continue your business, shall we use our expertise and experience to negotiate an affordable CVA, or shall we close the Company by a safely managed CVL and transfer your business seamlessly to a debt free NewCo?

How does a CVA work? What’s for doing it ? What’s against?

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HOW A CVA WORKS

The Director proposes a reduced sum settlement with creditors to cover all past liabilities, which has to be accepted by at least 75% of the creditors (by value) who reply and vote.

TO DO?..OR NOT TO DO?

A Company Voluntary Arrangement (CVA) can sometimes offer a positive alternative to Creditors Voluntary Liquidation (CVL). The strong upside is to let the Company reduce or defer most of its debts and continue to trade without interruption. Some downsides are delay with proposals that may be rejected, still having large liabilities and debt payments, being accountable to Creditors via a Supervisor and having to trade with a high risk Credit Profile.

Which is the best route for you?
If you wish to continue your business, shall we use our expertise and experience to negotiate an affordable CVA, or shall we close the Company by a safely managed CVL and transfer your business seamlessly to a debt free NewCo?

How does a CVA work?
What’s for doing it?
What’s against?

HOW A CVA WORKS

The Director proposes a reduced sum settlement with creditors to cover all past liabilities, which has to be accepted by at least 75% of the creditors (by value) who reply and vote.

Arrangement Terms and Fees

WHAT % OF DEBTS IS PAID?

This is not fixed, but negotiable. It can be different for different classes of Creditor – Staff (100%) – HMRC – Landlord – Trade. Clearly the overall commitment must be one which the forward business forecast shows to be achievable from post-tax profits.

A LUMP SUM SETTLEMENT

Will normally offer Creditors monies not otherwise available to them. This may be a voluntary payment from a third-party on the company’s behalf (the Directors themselves? Friends? a partnering commercial enterprise?). Or it might be a pledge of funds that will only fall due to the company at a future date if it continues to trade.

AN EXTENDED PAYMENT PROPOSAL

Will be supported by an accurate current balance sheet and recent trading performance history and a forward business forecast covering the period over which the Company says it will make payments to its Creditors from operating profits.

WHAT FEES ARE PAYABLE?

This is not fixed, but negotiable. It can be different for different classes of Creditor – Staff (100%) – HMRC – Landlord – Trade. Clearly the overall commitment must be one which the forward business forecast shows to be achievable from post-tax profits.

Arrangement Terms and Fees

WHAT % OF DEBTS IS PAID?
This is not fixed, but negotiable. It can be different for different classes of Creditor – Staff (100%) – HMRC – Landlord – Trade. Clearly the overall commitment must be one which the forward business forecast shows to be achievable from post-tax profits.

A LUMP SUM SETTLEMENT
Will normally offer Creditors monies not otherwise available to them. This may be a voluntary payment from a third-party on the company’s behalf (the Directors themselves? Friends? a partnering commercial enterprise?). Or it might be a pledge of funds that will only fall due to the company at a future date if it continues to trade.

AN EXTENDED PAYMENT PROPOSAL
Will be supported by an accurate current balance sheet and recent trading performance history and a forward business forecast covering the period over which the Company says it will make payments to its Creditors from operating profits.

A WHAT FEES ARE PAYABLE?
This is not fixed, but negotiable. It can be different for different classes of Creditor – Staff (100%) – HMRC – Landlord – Trade. Clearly the overall commitment must be one which the forward business forecast shows to be achievable from post-tax profits.

TO DO?
CVA UPSIDES?

Five upsides to a CVA rather than a Fresh Start Company
  • minimised disruption – customers need not notice the change;
  • termination of premises or equipment leases can often be avoided
  • requires no report to the insolvency service on Director conduct
  • easier to gain continuance with key suppliers who are bound in
  • after CVA is completed credit agencies can show CVA debts settled

TO DO? – CVA UPSIDES?

Five upsides to a CVA, rather than a Fresh Start Company.

  • minimised disruption – customers need not notice the change;
  • termination of premises or equipment leases can often be avoided
  • requires no report to the insolvency service on Director conduct
  • easier to gain continuance with key suppliers who are bound in
  • after CVA is completed credit agencies can show CVA debts settled

NOT TO DO? – CVA DOWNSIDES?

Five downsides to a CVA, rather than a Fresh Start Company.

  • hard to make enough post-tax profit to meet CVA payments
  • company will be trading with a negative CVA credit profile
  • CVA conditions restrict Director’s freedom including to borrow
  • staff arrears not met by government – paid as creditors
  • creating proposal is difficult and may not be accepted

NOT TO DO?
CVA DOWNSIDES?

Five downsides to a CVA, rather than a Fresh Start Company.
  • hard to make enough post-tax profit to meet CVA payments
  • company will be trading with a negative CVA credit profile
  • CVA conditions restrict Director’s freedom including to borrow
  • staff arrears not met by government – paid as creditors
  • creating proposal is difficult and may not be accepted

HOW TO DO? – WE  MANAGE THE WHOLE CVA TASK

HOW TO DO?
WE MANAGE THE WHOLE CVA TASK

  • Assess Current Financial Position and Discuss Futures
  • Advise on a Viable Shape of CVA for your Company
  • Defend Short Term against any pressing Creditors(s)
  • Help you create The CVA Proposal and Financial Forecasts
  • Assist as needed to Negotiate Acceptance by Creditors

CVA? OR A FRESH START COMPANY?

Give me a call to discuss what’s best for You

Michael O’Connor M.A Managing Consultant

Bromley : 0208 468 1033
Horsham : 01403 839766
Chichester : 01243 624716

or email :

CVA? OR A FRESH START COMPANY?

Give me a call to discuss what’s best for You

Michael O’Connor M.A
Managing Consultant

Bromley :0208 468 1033
Horsham :01403 839766
Chichester :01243 624716
or email :

Interco Management Services Limited

Bromley BR7 6LH : 0208 468 1033

Horsham RH12 1TL : 01403 839766

Chichester PO19 7DN : 01243 624716

Interco Management Services Ltd

Bromley : 0208 468 1033

Horsham : 01403 839766

Chichester : 01243 624716