The quick answer
You should apply for a Company Voluntary Arrangement (“CVA”) as soon as possible if you realise the company has a viable future but has had historical financial problems that have now been solved. The reason is that the longer you leave it, the more likely creditors will take action to force the company into liquidation.
In more detail
If you do not know whether a CVA is a good idea for your business it is best to talk to a Licensed Insolvency Practitioner like us. We can ask you the right questions to find out what the right options are for you. The circumstances that usually make a CVA the right decision are:
- You have had some problems in the past but these are solved. Some examples would be a pension shortfall claim or you have closed some unprofitable branches.
- You can predict that going forward you can make a profit.
- You have the support from some of your main creditors and that should continue.
- You may have some company assets, trading name, brand or certifications that you need to continue within your company name.
A CVA is not as fast a rescue process as an Administration. A CVA can take four to six weeks to put together.
The company has to make a written proposal to creditors which includes forecasts and cash flows. It also includes a company history, balance sheet and good reasons to creditors why a CVA is fair to them and you.