Company Voluntary Arrangement
A Company Voluntary Arrangement (CVA) is an alternative to liquidating your limited company allowing it to trade out of its financial difficulties over a specified period of time. It allows you as a director to retain control of your company and continue to trade without the burden of historical debts that can be a significant drain on cashflow.
Focus Insolvency Group will conduct a full review of the company’s cashflow and restructure the monthly payments to establish the amount affordable and the period over which it is to be paid (usually 60 months).
CVA’s provide a higher return to creditors than the alternative of Compulsory Liquidation due to the huge saving in associated costs and are therefore are widely recognised across the industry. HM Revenue & Customs have a department set up solely to consider proposed CVA’s and providing it can be shown the Company can trade at a profit they are more than happy to consider the offer on the basis they will get a much better return. They are often willing to put any enforcement action on hold that may be in progress.
We will assist you every step of the way in restructuring the Company to ensure it is profitable and draw up the company proposal.
Once the proposal is agreed by creditors they cannot demand any changes to the proposal and providing the company maintains the agreed payments it will be debt free within the agreed time scale.
- Can quickly improve company cashflow.
- Stops pressure from creditors including HM Revenue & Customs and covers all tax arrears.
- Can be implemented quickly even if a winding up petition has been issued.
- Not advertised locally or in the Gazette.
- Directors and shareholders retain supervised control of the company.
- No requirement to report to the Insolvency Service on the conduct of directors.
- Significantly lower costs than Administration or Compulsory Liquidation.
Company Voluntary Arrangement Case Studies
This company produced software programmes for the education sector and had traded for 6 years.
Although trading was good for much of this period, the company had recently entered into a contract to supply local schools with its new software product and if this trial was successful they would look to offer the product nationwide.
The directors of the company felt that the new product could be extremely profitable but it had taken their eye away from the main core of the business resulting in a reduced turnover.
The product had taken longer than expected to develop and the increased cost involved now meant the company was experiencing cash flow problems, leading to a build up of debt.
The company had debts of £70,000 to HMRC. The company also had 10 other creditors who it owed another £40,000 in total. This made £110,000 worth of debt that required paying immediately.
Focus Insolvency Group carried out an assessment of the business and advised the best way forward for the company was a CVA. Management restructure meant that the directors concentrated on the core products at the same time as developing the new software product. After successful negotiation with creditors by Focus Insolvency Group, a CVAwas approved for the company which provided for monthly payments of £1,000 for 60 months with all costs included and the balance of the debt written off.
With the CVA in place the pressure on the company was removed and they were able to complete a successful trial of the new product and then begin to work on national distribution. The company maintained its monthly contributions, traded profitably and was even able to bring the arrangement to an early conclusion by making a final lump sum payment into the arrangement within 2 years of the start of the CVA.
This company provided haulage services to the oil industry and had grown at a great pace in the first 3 years of trading, but unfortunately the fast growth had not been underpinned by enough capital. The company lost a big customer and the effect on cashflow meant that VAT and PAYE could not be paid; a winding up petition was then issued against the company.
Focus Insolvency Group quickly got the petition suspended and carried out a full assessment review of the company with the help of its directors and accountant. It was clear that if the current debt could be addressed than the company had a viable and positive future therefore Focus Insolvency Group recommended that a CVA be proposed to the creditors.
Focus Insolvency Group negotiated with HMRC and other creditors on the companies behalf and a CVA was approved for the company which provided for creditors to receive a dividend of around 25p in the £ after costs, which creditors accepted as this would save jobs and provide a better return than Liquidation.
The CVA has now been in place for three years and the company has met each affordable monthly contribution enabling jobs to be saved and a viable company to continue.
Take the next step
- Call us direct on 01257 257030 and ask to speak to a specialist in Company Voluntary Arrangement. You can see our biographies here and ask for someone direct if you like.
- We will discuss the company position: current trading, cash flow, assets, liabilities, creditor action and about your employees in clear terms you can understand.
- We will arrange a meeting to put a suitable measure in place to protect the company and your position.
- We will work out the best way to proceed taking all matters into consideration.
- You will be under the guidance of Licensed Insolvency Specialists, who act as officers of the court and trusted Professionals.
- If you just prefer some generic advice then sign up to our newsletter here and we will send you useful information and guidance on Insolvency and finance options without having to speak to anyone until you are ready.
Company Voluntary Arrangement Testimonials
Always helpful and took time to speak with me when I had pressure from creditors. Thank you for providing an excellent, trustworthy, kind and professional service”
Having one main point of contact made the process easier to deal with
I would like to take the opportunity to say how delighted I have been with the team at Focus Insolvency; I appreciate the expert advice given to my client and quick turn-around in a stressful difficult situation
Anthony Fisher MIPA, FABRP, Gary Birchall MIPA, MABRP, Jane Hardy MIPA and Dean Smith MIPA are licensed to act as Insolvency Practitioners in the UK by the Insolvency Practitioners Association. Focus Insolvency Group is a trading style of Debtfocus Business Recovery & Insolvency Limited.
Registered in England & Wales Company Number 6831646. VAT Number: 905 2306 58.