If your limited company is insolvent, it can use a Company Voluntary Arrangement (CVA) to pay
creditors over a fixed period. If creditors agree, your limited company can continue trading.
A CVA is for companies experiencing cashflow difficulties or have bad debts which they are struggling to recover.
A CVA is a legally binding agreement with your company’s creditors to allow a proportion of its debts to be paid back over time.
The company (Director) will provide a cashflow forecast and business plan in a formal proposal to the creditor.
In essence an agreement of what your company can be paid back and over what period of time. The creditors can request amendments that the Directors would need to agree. For a CVA to be implemented 75% of the creditors (by value) will have to agree with the proposal.
The proposal will detail how much creditors should expect to receive and whether this will be a full or partial payment.
Supervised by your Insolvency partner the agreed regular payments would be made to a designated client account.
A CVA is designed to allow the Directors to stay in control and for a company that is viable going forward but is burdened by historic debt.
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