WHAT’S FOR DOING IT?
WHAT’S FOR DOING IT?
WHATS INVOLVED? – CVA TERMS?
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.
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
HOW TO DO? – WE MANAGE THE WHOLE CVA TASK?
These are the steps we take to agree a worthwhile CVA
- 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
WHICH IS THE BEST ROUTE FOR YOU?
Shall 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?