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Business Recovery & Insolvency
COMPANY VOLUNTARY ARRANGEMENT (CVA)
If the company’s circumstances
are right, particularly where an underlying viable business
is experienced short term financial difficulties, a voluntary
arrangement may provide the valuable breathing space necessary
in order to turn the finances around.
An arrangement can enable a company to avoid the consequences
of liquidation or receivership by allowing trade to continue
through a managed process thus returning to the creditors a
greater return and saving jobs.
Should we determine a CVA is appropriate for your company we
will guide you through the procedure and assist in the formation
and drafting of proposals which are to be presented to the company’s
creditors. Where appropriate we will consult with other interested
parties including government departments, lenders and major
creditors to seek their views and requirements for a successful
solution.
For more information or to arrange
your initial free consultation please telephone Mark Botwood
on (01902) 393007.
QUESTIONS
Do all the company’s creditors
have to agree to the proposals?
Every creditor receiving notice of the creditors meeting is
entitled to vote at that meeting. This is particularly important
as only those creditors notified and entitled to vote at the
meeting are bound by the arrangement. This does not mean however
all creditors notified and entitled to vote must vote in favour
of the arrangement. Acceptance of the proposal or modifications
of the proposal require in excess of a 75% majority in value
of the creditors present in person or by proxy and voting on
the resolution.
Is the company protected from
creditor actions?
Every creditor receiving notice of the creditors meeting is
entitled to vote at that meeting. This is particularly important
as only those creditors notified and entitled to vote at the
meeting are bound by the arrangement. If some creditors do not
receive notice at all or receive inadequate notice then they
maybe free to take enforcement action against the company and
petition for the company to be wound up. In addition new credit
enjoyed by the company during the arrangement is not protected
under the arrangement and therefore again such creditors are
free to take their own enforcement action.
What restrictions are placed
on the company?
The arrangement is effectively a contract between the company
and its creditors bound under the arrangement. The terms and
conditions placed within the arrangement are agreed both by
the company and its creditors and therefore the company is only
restricted to the extent the terms are contravened .
How long will the arrangement
last?
The circumstances of the company and the causes of the company’s
difficulties will determine the proposed length of the arrangement
although ultimately it is for the creditors to decide whether
the length is suitable or not. There is no minimum or maximum
period of time although 5 years is probably most common.
Please select an area you are interested
in from the list below.
To find out more, please explore
the links. |
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