Reviewed 18th February 2020
A Company Voluntary Arrangement is a formal agreement that restructures your company’s debt, whilst enabling you to continue trading. Unsecured debts can be included, such as those owed to suppliers, trade creditors, and utility companies.
A CVA may be an option if your company is experiencing temporary financial problems, is expected to recover in time, and can support the monthly payments. If approved, the arrangement becomes legally binding for all parties as long as your company maintains the new repayment schedule for the duration.
Company Voluntary Arrangements typically last for 3-5 years. The arrangement details the amount of debt that will be written off at the end, and once it’s in place, all interest and charges are frozen.
A licensed insolvency practitioner (IP) is appointed to analyse the company’s financial position and put forward a proposal to creditors. They then vote on the CVA, and 75% (by value of debt) need to be in favour before it’s approved.
We can assess whether your company is eligible for a CVA, and formally negotiate with creditors to reduce the monthly payments on your debt. If a Company Voluntary Arrangement isn’t appropriate we’ll provide reliable advice on the best way forward.
So what are the main eligibility criteria for a CVA?
The company must be insolvent to be eligible for a Company Voluntary Arrangement, and a licensed IP must believe it’s viable for the future. This means the business must be able to support the new debt repayments whilst continuing to meet ongoing liabilities such as tax, National Insurance, and operational costs.
Our team can explain the benefits of entering into a CVA with your creditors, as well as describing any potential downsides that might arise during the course of the arrangement.
So what are the main advantages and disadvantages of a CVA?
Our team has extensive experience of helping limited companies industry-wide to deal with debt, and regain their position in the market. We’ll offer reliable independent advice on your situation, and negotiate with creditors on your behalf.
If a CVA isn’t appropriate we can also provide trustworthy guidance on any alternative options. Scotland Debt Solutions operates from a network of offices around Scotland, and can offer you a free same-day consultation with one of our partner-led team.
As many as 12 million adults across the UK were struggling with debt and battling to keep pace with demands on their finances in July this year, according to the Financial Conduct Authority (FCA).
The Scottish government has said it will be providing local authorities across the country with an extra £30 million to help them tackle financial insecurity in their areas.
Our Scottish based team can help advise you on your debt problems.
Administration is an insolvency process that provides breathing space for companies struggling with debt, giving them the time needed to establish a plan going forwards. With several options potentially available at the end of administration, it’s an effective step for many businesses.
When a limited company becomes insolvent, it’s important for directors to place the interests of creditors first and do all they can to minimise further losses. Creditors’ Voluntary Liquidation (CVL) is an insolvency process that allows this to happen, and ensures directors comply with strict insolvency laws.
Members’ Voluntary Liquidation (MVL) allows you to close your business and extract the profits in a tax-efficient way. It’s a process that’s available to solvent limited companies, and requires you to make an official Declaration of Solvency prior to commencement.
A director’s loan account (DLA) can become overdrawn if too much money is taken from the company that isn’t salary or a dividend. Directors’ Loan Accounts are useful when operated with caution, but can be a cause of concern if the company becomes insolvent.
A Winding-up Petition is a legal notice presented to the court by a creditor with a view to forcing a company into liquidation. If a winding-up order is granted by the court, compulsory liquidation can take place very quickly, and this signals the end of the company.