A Company Voluntary Arrangement, or CVA as it is known, is a formal alternative for company’s wishing to avoid liquidation.
It is a contractual arrangement setup by an Insolvency Practitioner between a company and its creditors. An arrangement lasts for a fixed term and ultimately results in debt write off on successful completion.
A CVA can be as flexible as a company’s own circumstances and can be based on surplus profits, release of capital, third party contributions or a combination of all of these.
In most circumstances, once a CVA is approved creditors are unable to charge interest and charges on the balance due to them. This is one of the main advantages of a CVA and helps stem the overall debt owed.
CVA’s are becoming an increasing popular tool in rescuing an insolvent company from a terminal insolvency procedure. Recent high profile cases include the rescues of JJB Sports and Portsmouth City Football Club Limited.
For more information about how CVA’s work and whether it is a viable option for you, contact us today for free no obligation advice.