Company voluntary arrangements

 

Company Voluntary Arrangements (CVAs) are potential rescue mechanisms for both solvent and insolvent companies in financial difficulties

It is a legally binding agreement between a company and the creditors of that company and usually involves the company and the creditors agreeing a payment plan, where all or part of the debt is paid over an agreed period of time. 

What is a moratoriam?

Although there is no moratorium (a freeze on actions against the company) available for large companies, there is a moratorium available for small companies. The moratorium allows breathing space for the company - a period of twenty-eight days, with the possibility of extending this period. The company may continue trading during and after the period of the CVA.

How do I set up a CVA?

The procedure for setting up compulsory voluntary arrangements is for the directors of the company to make a written proposal to the creditors of the company, nominating an insolvency practitioner who will look at the proposal and report to court on its viability.

A meeting of members and creditors is usually held to see if the proposal can be agreed and, if it can, the creditors and company are bound by its terms. 

If you would like to obtain legal advice on company voluntary arrangements (CVAs) or advice about the options for a solvent or an insolvent company, Contact Law can put you in touch with a local specialist Insolvency Solicitor free of charge. So, if you have any questions or would like our help in finding local Insolvency Solicitors please call us on 0800 1777 162 or complete the web-form above.

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