When to use a CVA

A Company Voluntary Arrangement (CVA) can be used when a company is insolvent. However it should be able to trade profitably if the weight of its debts was taken away.

In other words the company should able to make a contribution towards its debts each month but is unable to meet the normal payment terms being demanded by its creditors.

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Once agreed, a CVA allows a company to make a single payment towards its debts each month based on what it can afford to pay. Payments are made over a fixed period of between 3-5 years after which time any unpaid debts are written off.

Directors’ time is freed from managing hostile creditors and can be concentrated on building and developing the business.

Unlike other company insolvency solutions, a CVA does not involve liquidating the company. This means that the company directors avoid an investigation into their conduct which would be undertaken by the liquidator if the company was closed. A CVA is therefore often suitable if there is a concern in this area.

In addition if the directors of the company owe significant sums to the business in the form of an overdrawn directors current account, arrangements can be made for these sums to be repaid over a sensible period as part of the CVA process normally by offsetting from salary payments.

More Company Voluntary Arrangement Information

Only a brief overview of the Company Voluntary Arrangement solution is given here. For more information about the CVA solution see one of our dedicated websites:

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