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Company Voluntary Arrangements (CVAs)

A Company Voluntary Arrangement (CVA) is a solution to insolvency that can be used by small organisations. CVAs are generally only applicable if your business turns over less than a certain amount a year and it has fewer than 50 employees. You can use a CVA to repay your creditors over a fixed period of time and you will be able to continue trading.

What are the pros and cons of CVAs?

  • Pros:
    • An insolvent business will become solvent and can continue trading
    • The agreement is legally binding and can relieve a significant amount of financial pressure
    • CVAs can improve cash flow almost instantaneously
    • There are much lower costs involved than going into administration
  • Cons
    • If the terms of the CVA are not adhered to, creditors can take legal action against you and your business
    • Setting up a CVA can be time consuming and expensive
    • Gaining an extension of credit may become difficult in the future
    • You may invest a considerable amount of money in setting up a CVA and if your creditors do not accept the agreement, this investment will go to waste

What is the process for arranging a CVA?

In order to set up a CVA, you need the assistance and expertise of an insolvency practitioner. All administration, charges and payments will go through this individual and enable the agreement to function appropriately. Your insolvency practitioner will work out a payment schedule, arrange a meeting with your creditors and negotiate the terms on your behalf. These processes need to be implemented with utmost accuracy in order to protect the best interests of your business. You must be approved by creditors who are owed at least 75% of the debt in order to use a CVA.

Our experts can advise on all matters relating to CVAs and explain your options in plain English.

Get in touch today

To arrange a free consultation with one of our experts, call Lance Mason today on 08000 84 2000.

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