A Company Voluntary Agreement (CVA) is an agreement between a company and its creditors where the company agrees to repay debts from future profits over an agreed period of time. This allows the business to continue operating under existing management while repaying creditors. A successful CVA requires a viable business with past profitability, professional advisors, reasonable working capital, and a structured repayment plan with conservative forecasts and achievable targets. A CVA can be an excellent solution for companies facing pressure but with a viable long-term business model.
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Company Liquidation Services
1. What is a
Company Voluntary
Agreement?
January 2014
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2. CVA
A CVA is a deal between a company and its creditors to repay them
from future profits or a deal may be written to sell assets and pay back
creditors from the proceeds.
The deal is based on preserving the company and paying something
back over a period of time to be agreed. The directors remain in control,
personal guarantees don’t usually get called in and it gives the business
a fighting chance to survive.
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3. The Components of a Successful CVA are:
A viable business that has the
opportunity to return to profitability.
It will have traded and been
profitable in the past.
Professional CVA advisors
to structure the deal.
The introduction of reasonable levels
of working capital in addition to the
restructuring of the debt.
A commercially structured deal
where you do not pay back too
much too soon to creditors.
Conservative forecasting.
Achievable targets are essential
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4. If the pressure is growing
but you believe you
have a viable business
then a CVA can be an
excellent solution
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Your duty as a
director includes
maximising your
creditors’ interests
and by continuing
to remain in business
and trade you will
do that in a
Company Voluntary
Arrangement.
www.companyliquidationservices.co.uk