Company Voluntary Arrangement Frogmill in Frogmill

Contact Us

Company Voluntary Arrangements or CVAs, as they are also known, are one of the ways in which a limited company, which is classed as insolvent, can pay back their debts to creditors over a fixed period of time.  Insolvency is when a company is unable to pay back their debts as they fall due or if they do not have enough assets to cover its debts, for example, if the value of assets falls less than the amount of liabilities. 

If you think this may apply to you and your company, don’t fret, we can definitely help. If your company is deemed insolvent, then the director no longer has a primary responsibility towards the care of its shareholders but its creditors instead.  It is similar to bankruptcy, but bankruptcy is the term used only for personal debt, whereas insolvency is the terminology used for business debt.

Find Out More

Many companies across the UK find themselves insolvent and every circumstance of insolvency is different to the next.  That is why there are several ways that directors can consider to ensure that the matter is best resolved.  It is recommended that companies seek sound advice to ensure that the best solution is chosen, and this should be chosen sooner rather than later. 

There are in fact four different procedures to consider if you feel as though your organisation is heading towards insolvency that may help rescue the situation before it gets bad.  These include Administration, Administrative Receivership, Liquidation and finally, as discussed below, Company Voluntary Arrangements.   This is one of the lesser known insolvency procedures available for businesses.

What is a Company Voluntary Arrangement?

A Company Voluntary Arrangement is an agreement with your company’s creditors to allow more time to pay back debts. This is a legally binding agreement as it stands and 75% of creditors, by value, must support the proposal, otherwise it will not be approved. 

After the proposal has been approved by all involved, any unsecured creditors are bound to it and your limited company can continue trading, even those creditors that did not vote (by choice or no notice) have to act within this arrangement.   Therefore, no unsecured creditors are able to take legal action against your organisation outside the CVA.

It is certainly one of the most flexible insolvency methods available as, apart from the procedure and content of your proposal, which are both dictated by law, the rest of this arrangement is determined by the company, with the hope that the creditors will agree to it. 

Unlike other procedures which may be considered, this has no effect on employee contracts so jobs can be saved, unless redundancies are a necessary part of the procedure, for example, during a restructure.

The arrangement will usually last over a period of 3-5 years and is closely monitored by a licensed insolvency practitioner who acts as a supervisor to the arrangement.  The time agreed on will help the business to repay all or some of its debts whilst still trading and remaining under the management of its own directors. 

How Much Does a CVA Cost?

A CVA can only be granted through an insolvency practitioner who not only charge for the application process but also the administration process.  It is difficult to say exactly how much the Company Voluntary Arrangement will cost as each case is unique and varies depending on total number of creditors, employees, position of the bank and what level of negotiation is needed. 

There are many people involved within the arrangement, and that does mean that a lot of communication needs to take place between not only to the company and its creditors but also the company’s stakeholders.  Like many other insolvency procedures, the sooner the ball is rolling the easier, and cheaper, the case can be to handle.  Professional insolvency practitioners can give you an idea of cost once they fully understand your company’s financial position.

Pros and Cons of a Company Voluntary Arrangement

Pros

·         Can improve cash flow within a short amount of time

·         Pressure from tax, VAT and PAYE is lifted whilst the agreement is being prepared

·         Company remains operational as a separate legal entity and managed by its existing team

·         Business contracts, accreditations and licenses are likely to be unaffected

Cons

·         It is possible that there may be disagreements over the proposed CVA between directors.

·         If a single creditor makes up a large percentage of the company’s debt, then they have a strong position to negotiate deals on their terms

·         It will have a negative effect on company’s credit rating and obtaining future credit may be an issue well after the arrangement has ended.

·         The arrangement does not legally bind secured lenders, so they can still take legal action.

CVA Process in the UK

The application process for a CVA in the UK can only begin if all the directors or members agree and this must be done with an insolvency practitioner.  The insolvency practitioner will then start to work out a plan and arrangement as to how much debt the company can pay back and a payment schedule to ensure this is achieved.  This must be completed within a month of being appointed to supervise the CVA.

One the arrangement has been written up, the insolvency practitioner will write to all creditors and provide necessary information and invite them to vote on it.  As mentioned earlier, for the Company Voluntary Arrangement in Frogmill to be granted, it must be approved by creditors who are owed at least 75% of the debt.  If this cannot be achieved, then the company may face voluntary liquidation, whereby its assets are used to pay off its debts, the business will stop trading and will be removed from the companies register at Companies House.

If the voting is successful and works in the company’s favour, then the scheduled payments must be made to the creditors via the insolvency practitioner over a set amount of time and until the agreed amount is paid off.

Get In Touch

We cover Frogmill (Berkshire)

Get in touch

We aim to get back to you in 1 working day.


Other locations available for company voluntary arrangement frogmill
Poundgreen West End Furze Platt Tilehurst Tickleback Row Warfield Bucklebury Bisham Boyn Hill The Rise Remenham Hill Greenham Upton Goddard's Green Maiden's Green Shepherd's Hill Braywoodside Applehouse Hill Bothampstead Tittle Row Winter Hill Eastbury Myrke Southend Sunnymeads Wasing Lower Caversham Hurst Tittenhurst Blacknest Hopgoods Green Altmore Brightwalton Welford Hare Hatch Upper Green The Throat Touchen-end Quick's Green College Town Four Points Theale Hemdean Bottom Beenham Stocks Moss End Sulham Brookside Ashampstead Green Woodley Old Windsor Chapel Green Stanmore Bradfield Whitegrove Westbrook East Fields Woodlands St Mary Wick Hill Cold Ash Aldworth Harmans Water Wexham Court Wokingham Water Oakley Cold Harbour The Warren Woodley Green Ham Marsh Farley Hill Cox Green Wargrave Holloway Nodmore Cockpole Green Calcot Upton Park Wash Common Holly Cross Crockham Heath Nuptown North Street Spital Shaw New Town Moneyrow Green Crookham Newell Green Grazeley Green Chieveley Chalvey Sunningdale Merryhill Green Tidmarsh South Fawley Riseley Caversham Heights Finchampstead Trapshill Brightwalton Green Hungerford Newtown Sonning Fishery Clewer New Town Arborfield Cross Charvil Bracknell West Fields Crazies Hill Hurley Bottom Whitley West Ilsley The Holt Borough Marsh East Ilsley Halfway North Ascot Enborne Swallowfield New Town Broomhall Lambourn Woodlands Eton Wick Dedworth Oakley Green Horsemoor Wickham Heath Avington Lower Green Aston Sutton Three Mile Cross Combe Horncastle Boxford Coley Datchet Common St Leonardshill Pangbourne Waltham St Lawrence Bucklebury Alley Britwell Inkpen Common Windsor Old Warren Longlane Compton Stitchens Green Burghfield Shurlock Row Ryeish Green Frilsham Sunninghill Mortimer Midgham Green Cranbourne Brimpton Common Sandhurst Binfield Spencers Wood Ravenswood Village Settlement New Greenham Park Emmbrook Colthrop Caversham Whitehouse Green Winterbourne Hurley Martin's Heron Earley Upper Lambourn Temple Park Leckhampstead Midgham Whistley Green Frogmill Woodside Matthewsgreen Upper Basildon World's End Titcomb Priestwood Crown Wood South Ascot Haughurst Hill Temple Speen East Garston Farnborough Upper Woolhampton Chavey Down Woose Hill Holme Green Jennetts Hill Westrop Green Donnington Dowlesgreen Mount Pleasant Southcote The Village Arborfield Cookham Rise Forest Park Curridge Knowl Hill Poyle Bowsey Hill Kintbury Stud Green Wawcott Churchend Little Heath Whitley Wood Horton Aldermaston Soke Marsh Benham Bullbrook Hoe Benham Woodlands Park The Holt Shefford Woodlands Weston Cheapside Ownham Popeswood Mile End Ufton Green Eddington Langley Aldermaston Wharf Colnbrook Eastheath Speenhamland Hollingsworth Bagnor Sulhamstead Abbots Broadmoor Estate Whiteknights Beedon Yattendon Miles's Green North Town Hamstead Marshall Crowthorne Englefield Stockcross Pingewood Sulhamstead Bannister Upper End Owlsmoor Slough Burchett's Green Hell Corner Clewer Village White Waltham Heathlands Leckhampstead Thicket Hyde End Sindlesham Anvilles Woodspeen Ashampstead Highway Kiff Green Wildridings Winnersh Beech Hill Reading Winkfield Place Winding Wood The Slade Elcot West End Hungerford Thatcham Easton Little Hungerford Aldermaston Upper Bucklebury Kiln Green Hillgreen Eling Billingbear Enborne Row Salt Hill Purley on Thames Stratfield Mortimer Padworth Common Holyport Calcot Row Beenham Birch Hill Schoolgreen Clapton Shinfield Grazeley Four Houses Corner Sulhamstead Tutts Clump The Mount Winkfield Bray Wick Ashmore Green Upper Wargrave Wash Water Burghfield Hill Arborfield Garrison Hythe End Warren Row Cabbage Hill Lower Padworth Stanford End Leverton Cookham Dean Cookham Woolhampton Brockhill Hanworth Sanham Green Datchet Wickham Parsonage Green Wraysbury Goldfinch Bottom Streatley Binfield Grove Hungerford Hawthorn Hill Hermitage Little Sandhurst Farleywood Eton Langley Common Ufton Nervet Stubbles North Heath Westridge Green Wick Hill Easthampstead Binfield Park Burnt Hill Lower Basildon Brimpton Gardeners Green Stubbings Maidenhead East Garston Woodlands Bury's Bank Sheffield Bottom Beenham's Heath Oare The Ridges Brands Hill Padworth Bray Plaistow Green Barkham Fawley Upton Lea Clewer Green Stanford Dingley Cippenham Beedon Hill Wellhouse Skinners Green Paley Street Church Lammas Stone Copse Newbury Trash Green Emmer Green Southend Sheepdrove Jealott's Hill Catmore Mell Green Winkfield Street Lower Earley Brightwalton Holt Maidenhead Court West Woodhay Inkpen Pinkneys Green Great Hollands Hungerford Green Chapel Row Skimpedhill Twyford Littlewick Green Woolley Green Parker's Corner Great Lea Common Littlefield Green Burghfield Common Lambourn Winkfield Row Ascot Fifield Downend Amen Corner Whatscombe Peasemore Great Shefford Chaddleworth Remenham Bigfrith Eversley Ruscombe Sulhampstead Bannister Upper End Hampstead Norreys