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What is a CVA?


How does a Company Voluntary Arrangement work?

A CVA is a formal business rescue procedure that ringfences company debt within a carefully structured and legally binding agreement. Company Voluntary Arrangements can help struggling but commercially viable companies to regain momentum whilst repaying a proportion of their debt.

Company directors remain in control with a view to trading out of financial difficulty, supported by a solid arrangement that offers full protection from aggressive creditor legal action.

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Are you eligible for a CVA?

Companies need to be able to make regular monthly repayments to be eligible for a CVA. This is fundamental to the success of the process, and payments must be maintained over the duration of the agreement, which typically lasts between two and five years.

If you’re experiencing severe financial issues but can provide reliable cash flow projections and operate with strong financial tracking and reporting systems, you may be eligible for this effective process.

Company Voluntary Arrangements are typically suited to small and medium sized businesses that can operate with agility and take advantage of a fast track path to recovery – a particularly important consideration during these challenging economic times.

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CVAs and coronavirus

Coronavirus has wreaked havoc on businesses that were previously thriving, and through no fault of their own some company directors have found themselves with no business to run over a period of just a few months.

The government measures needed to combat the spread of this virus have taken a huge toll on the economy as a whole – social distancing and lockdown creating an impossible operating environment.

With the potential for further disruption ahead it’s crucial to take resolute action now, and a fast track CVA could be the way for eligible businesses to regain traction and move forward with purpose.

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How does a CVA work?

This is the CVA process in brief:

  • Following the appointment of a licensed insolvency practitioner (IP) the company’s financial position is assessed and a proposal presented to creditors
  • Creditors vote on whether to accept the proposal. If 75% or more vote in favour, the arrangement comes into force and creditors who voted against the CVA must accept the terms.
  • Company directors continue to trade, and payments are distributed to creditors in the agreed proportion – a process overseen by the appointed insolvency practitioner
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Professional presentation of the CVA proposal

A realistic and clearly presented CVA proposal encourages creditors to vote in favour, and ensures they understand why the measures have been put forward. The proposal will include an explanation of why a CVA is a good option for creditors, and how the business will keep up with repayments.

Clear cash flow projections are crucial in this respect. They provide reassurance for creditors, but also for directors, as they demonstrate that the company is sufficiently viable and able to meet the new terms and conditions.

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What is a fast track CVA?

The standard Company Voluntary Arrangement process is speeded up under fast track. Eligible businesses can take quick action to prevent further financial decline, without detriment to creditors who typically receive greater returns under a CVA than if the company had to liquidate.

A fast track CVA enables agile companies to take positive fast action in a supportive environment, and can be pivotal for those businesses that were experiencing strong growth before the coronavirus pandemic took hold.

For more information on how a CVA can help your business, please call one of our partner-led team at Fast Track CVA. We offer free same-day consultations to quickly establish your eligibility, and explain the process further.

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Sectors using Fast Track CVA





Financial Services