Company Voluntary Arrangement (CVA)
What is a CVA?
Essentially, a CVA is a deal between a company and its creditors to settle its liabilities (or, more likely, a portion of them) over an extended period of time. CVAs are just one of the corporate restructuring tools available through the Insolvency Act 1986 but they are always initiated by a company's directors - hence the description 'voluntary'. The directors remain in control of the company for the duration of the arrangement.
Company voluntary arrangements are not frequently used in Scotland but there is no good reason for this. A CVA can be the right solution for you if your underlying business is sound but, for example, you've suffered a significant bad debt or lost an important customer.
Key Features
It is important to understand how the company got into difficulties and to put in place measures to correct the issues. That can involve cost cutting measures, relocation or boosting sales.
The important thing is that it's your company and your proposal. You will be responsible for meeting the key milestones.
Although you cannot use CVAs to write off bank debt, banks can and do agree to sensible restructuring proposals. HMRC will also consider realistic proposals which pay a reasonable dividend.
For more information, contact Maureen or Antonia.