If your company is no longer able to satisfy creditors, either because your liabilities exceed your assets or you’re unable to pay debts as they mature, you may be able to apply for a Company Voluntary Arrangement (CVA).
What is a CVA?
A CVA is put in place when you can no longer afford to pay creditors. It is an agreement between your company and your creditors, to pay them what you owe over a fixed period. If the creditors agree to the terms of the arrangement then your company can carry on trading. If you don’t receive 75% of the votes from creditors you could face voluntary liquidation.
Who can apply for a CVA?
If you are a company or a limited liability partnership (LLP) you can apply for a CVA. All directors or members must agree for a CVA to be carried out.
What happens when I apply for a CVA?
According to Business-debt-management.co.uk the steps to completing a CVA are:
Step 1 – Company Directors to agree to enter a CVA
The first step is for the company Directors to agree to enter the company into a CVA.
Step 2 – Contact a member of our team
The directors must instruct an Insolvency Practitioner, such as a member of our team, to assist with the preparation of the CVA proposals. We will guide you through the process making sure that you understand what is happening and answering your questions.
Step 3 – We will prepare the CVA
Our role is to help the directors prepare the CVA proposal, ensuring that it is prepared in accordance with the Insolvency Act 1986.
Step 4 – We will oversee the CVA and guide you through the process
We will then oversee the whole CVA process. We will deal with the legal issues, the company creditors and the court correspondence.
Step 5 – The creditors meeting to agree the CVA
We will arrange the meetings with the creditors to discuss the proposed Company Voluntary Arrangement. At least 75% (in value of creditors voting) must approve the proposed CVA for it to take effect.
Step 6 – You run your company and pay your debt as per the agreed CVA
Once it is approved it is legally binding on the company and all its creditors. The company directors can then turn their attention back to running their company, with the Insolvency Practitioner’s consent.
These are the steps that will be carried out if you apply for a CVA from Business-Debt-Management.co.uk
Applying for a CVA will allow you to carry on the running of your business as normal, whilst paying off the agreed amount of debt with creditors.
Author Bio: Leah Jarratt is a regular guest writer for Business Debt Management, dealing with business debt and insolvency.