Where a fundamentally viable company faces a solvency crisis a company voluntary arrangement (CVA) can be a very powerful tool. A company voluntary arrangement is a "deal" between a company and its creditors to repay them from future profits or from the proceeds of the sale of assets that are no longer required within the business.
One of the keys to the arrangement is identifying the matters that have caused the financial difficulties and ensuring that these are addressed (making the business viable going forward). The business must have a viable future and cash flow projections are required. The arrangement preserves the company and its business and promises either a partial or full payment to creditors over a period of time.
The directors retain control of the company, unless the CVA specifically grants powers to the Supervisor, who is a qualified insolvency practitioner appointed to oversee the arrangement.
The process of entering into a CVA is governed by the court although the court plays no active role in deciding whether the arrangement is approved. To be approved, the proposals must have the support of 75% of creditors who cast their vote at a meeting of creditors. During the period between the meeting being called and taking place, the insolvency practitioner is able to discuss the views of creditors and, if necessary, propose modifications to secure the approval of the CVA.
Once approved, the creditors who are bound by the arrangement can take no other action against the company in respect of their pre-arrangement debts.
At Turpin Barker Armstrong we can assist you with placing your company into a CVA. Our insolvency practitioners can deal with the whole process and are always at the end of the phone to provide support and assistant where needed. We are happy to go through the process with you before a decision is made as to whether placing the company into a CVA is the best solution for you.
If you require advice regarding a company entering into a CVA, we at Turpin Barker Armstrong can help, please contact our office on 0208 661 7878. We always offer the first meeting free of charge with no obligation.