Company Voluntary Arrangement
The Perfect Answer
As we exit the COVID era you may now have a great business which is being held back by the millstones of deferred taxes and supplier debts.
Did you know that in order to give you the time you need to regenerate your business you can freeze all of that debt and pay off what you can afford over a period of up to 5 years, trading on as normal during that time.
You can do this by implementing a Company Voluntary Arrangement, an inexpensive, contractual deal agreed with the creditors, governed by the Courts and overseen by an Authorised Insolvency Practitioner who’s there to make sure that the deal works.
You will remain in control of your company which will continue to trade on normally, there is no liquidator to give you a hard time and creditors will generally agree a sensible payment plan over the agreed period.
Depending on how much is owed and who it’s owed to you may actually get a huge discount on what you pay back.
How it works
Your Company is under financial pressure but is still viable.
You don’t want to liquidate or administrate your Company as that would jeopardise the business and its assets and you feel an obligation to the suppliers and customers to find an alternative way forward.
A Company Voluntary Arrangement then becomes the perfect answer so how does it work?
- First, with the benefit of informed advice the directors decide that a CVA is the right thing for the Company and the creditors.
- A full and detailed Proposal is prepared which explains why the Company is in difficulty and makes an offer to all creditors to pay them off in part or in full. Typically that payment offer involves making monthly contributions into a pot over a period of up to 5 years. That pot then builds and is distributed to creditors in regular payments over the agreed period.
- An Authorised Insolvency Practitioner reports on the viability of the CVA Proposal and his comments are added to the Proposal document which is then sent to the creditors for them to consider.
- The creditors then vote on the Company’s offer and if three quarters of the value of the creditors who bother to vote accept the offer it becomes binding on all creditors and the company enters into a CVA. In reality HM Revenue & Customs will usually be owed more than any other creditor so if they vote for the CVA it will be accepted even if other creditors vote against it. A reasonable offer will almost always secure their support.
- From the Company’s decision to apply for a CVA to the final vote takes approximately one month and, if there are bailiffs hovering, a Court moratorium can be applied for which will stop any further action during the process.
Fees and Costs
Aside from our own set-up fee, which is never a deal breaker, all fees and costs are payable by the creditors out of the of contributions paid during the CVA.
Our set up fee will be agreed at the outset and will reflect the complexity of what we are engaged to deliver. However any initial consultation will be completely free of charge and will result in a firm no obligation quotation for managing the project which will be discussed and agreed between us before any fee is paid.
One of our experienced Consultants will be happy to talk you through the CVA process at all stages so give us a call on 01494 857190, email us on email@example.com or complete and submit the CONTACT form elsewhere on this website and we’ll be happy to do that over the phone or in a face to face meeting.
Received a winding up petition?
Any winding up petition will be dismissed when a Company Voluntary Arrangement is accepted by the creditors.
The dismissal of the petition will then give you back control of the company having cut a deal with creditors to pay some or all of their debts over a period of up to 5 years.
If you engage us to assist the process is then as follows:
- We will approach the petitioning creditor to request an adjournment of the hearing of the petition for a period of eight weeks while a CVA Proposal is prepared to deal with the company’s debts. HM Revenue & Customs, the petitioning creditor in the majority of cases, will generally not object to an adjournment as long as the company is represented at the petition hearing.
- If HM Revenue & Customs are the petitioning creditor we will arrange for legal representation at the hearing to disclose this agreement to the Court. The hearing will then be adjourned, generally for eight weeks;
- If the petitioning creditor is not HM Revenue & Customs and has not agreed to an adjournment the legal representative will instead argue the case at the hearing. If it is the first hearing of the petition the application for an adjournment is very likely to succeed, whatever the views of the petitioning creditor;
- We would usually expect to obtain an adjournment of the hearing of a petition, whether or not the petitioning creditor is in agreement, for a period of time sufficient to prepare a CVA Proposal and submit it to the creditors;
- If the company itself is viable but for the petition an application can be made for a Validation Order to unfreeze the bank account and allow trading to continue;
- Once the hearing is adjourned the creditors will be invited to consider and vote on the acceptance or rejection of the CVA Proposal and, if 75% by value of the unrelated creditors who vote agree, the CVA will commence and the petition will be dismissed;
- You are then back in control of your company and able to make decisions again without the constraints of the petition.