If your company is under serious pressure, but if the historic debt was removed, the business remains viable, then a Company Voluntary Arrangement (CVA) could be the answer. There are a number of steps you need to follow.
If your company is under serious pressure, but should the historic debt be removed, the business remains viable, then a Company Voluntary Arrangement (CVA) could be the answer.
How does a Company Voluntary Arrangement work?
Its is a process agreed with your creditors to pay back a percentage of the debt over a fixed period of usually 3 or 5 years. The creditors agree to reduced payments in full settlement of the debt owed.
Why would the creditors do this?
Creditors have the possibility of receiving some return on what they are owed which they would almost certainly loose if the business was wound up. They also have the opportunity of continuing to trade with the business into the future. There are significant advantages for the company if a company voluntary arrangement can be agreed. The company structure and employees are maintained. This means important resources are not lost as they might be if the business was put into administration or went through a pre-pack liquidation. The company is also left in a much better trading position as the burden of its legacy debts is lifted.
If you believe a Company Voluntary Arrangement is the correct course of action then you will need to follow the steps below:
Getting the Company Voluntary Arrangement agreed is the start of the hard work. Directors will then have their work cut out to make sure that the company flourishes and the terms of the arrangement are maintained. It is advisable to consider some changes to the management in order to bring new energy and experience to the company - this does not need to be a major executive cull. However, at the very least a new non executive director should be introduced. New capital investment for business development may be desirable. The company insolvency expert will be able to advise about this.
The fees associated with carrying out a company voluntary arrangement will normally consist of an initial fee charged by the company insolvency expert. Additional Nominee and Supervisors fees will be charged by the insolvency practitioner. However, these will generally be taken from the ongoing payments that the company makes into the CVA. As such, the company will not have to pay these additional fees over and above what it is already paying to the CVA.
What happens to the directors if a company is wound up?
Once a company is being wound up a Liquidator will be appointed. The liquidator will undertake an investigation into the conduct of the directors to see whether they have knowingly allowed the business to trade while insolvent thus making the creditor's position worse. If this is the case, a director may face being disqualified and held personally liable for the company's debts. As a Director we look at the options you have.What will having a County Court Judgement do to my company
If a county court judgement remains unpaid, this could lead to more serious action being taken against the business. We look at the impact and what you can do.Company debt restructure to improve cash flow
Ensuring that enough cash is available to maintain their business must be a priority for companies. Those that do it well will survive. Those that do not are likely to fall. As such identifying problems and implement solutions which may require a radical restructuring of debt must be a priority. We discuss some of the solutions available.