COMPANY VOLUNTARY ARRANGEMENT ("CVA")

A CVA allows a financially troubled limited company to reach a legally binding agreement with its creditors, enabling it to make payment of all, or (as is normal) a percentage of, its debts over an agreed period of time.

A CVA enables a limited company which is viable and profitable, but which has experienced bad debts or a one-off problem that has seriously affected its financial position, to continue to trade without the burden of pressure from its creditors, and under the sole control of its directors.

A major advantage of a CVA is that up to 75% of debts can be written off, with the balance to be paid being deferred by monthly instalments over a number of years.

Also, there is no investigation into the directors conduct, and no prospect of disqualification.

CVA is a legally binding agreement with the company's creditors, allowing up to 75% of liabilities to be written off

Debts are significantly reduced, and by rescheduling the balance into regular monthly payments, cash-flow is dramatically improved

The business continues to trade under the control of its directors

Minimum disruption occurs (it is probable that customers will be unaware of the CVA)

CVA enables onerous contracts, leases, obligations etc. to be terminated

Legal action by creditors is stayed

No investigation into directors’ conduct

No calling-in of overdrawn directors’ current accounts