How much does a CVA cost?
Placing a company into a voluntary arrangement costs between £3,000 and £10,000, depending on the size of your business and how many other businesses you owe money to. If you would like a free, no obligation online quote for your business click here.
Can a CVA stop bailiffs?
Yes, but you only get legal protection once the CVA has been accepted by creditors. If bailiff action has commenced against you before then, or if you think it is imminent, we can negotiate with the bailiffs to hold off until a CVA can be put in place.
Does a CVA prevent a winding up petition?
Once a CVA is agreed, it follows that the winding-up petition will be dismissed. If the winding-up petition is due to be heard prior to the acceptance of a voluntary arrangement, however, we can and would need to organise an adjournment of the petition.
Will I need to apply for a validation order before I get a CVA?
You should apply for a validation order if a winding-up petition has been issued against your company, and it is your intention to propose a CVA and continue trading. The validation order will allow you to continue paying money to creditors, without falling foul of insolvency legislation. We can assist with a validation order application if required.
Can we continue to trade in a CVA?
Yes. Voluntary arrangements are a means of restructuring whilst a business continues to trade. However, if a winding-up petition has been issued prior to a CVA being accepted it is recommended that a validation order is applied for, otherwise directors can be held personally responsible for any payments made to creditors in the period that the petition was issued should the company be liquidated.
Am I expected to pay back a minimum pence in the £?
No. It is expected that the company pays back what it can reasonably afford. Creditors will look for honesty in the figures provided, and in our experience, it is more effective to err on the side of caution than to over-promise.
How do you calculate how much my company pays into the CVA?
Profit & loss and cash flow projections will be prepared for your company. From this and your business’ individual circumstances, we’ll determine how much your company can afford to pay at different times of the year. For more information on the process have a look at our article What makes a successful CVA?
How will it affect my personal guarantees?
When we are negotiating with your creditors, we will reach agreement with any companies that you have outstanding personal guarantees with. This may involve no further payment other than the CVA contribution, although on some occasions, you may need to agree a top up from personal funds.
What happens to my employees in a CVA?
Employment rights are not affected by voluntary arrangements. If at the time of setting up a CVA, there are outstanding payments due to staff that have left the company, their claims can be included within the CVA, and they may be able to claim from the national insurance fund, after which the fund would be a creditor in the CVA instead.
Are my customers informed of the CVA?
No. We write to your creditors and notice of the CVA is filed at Companies House, but we do not contact your customers.
Are directors investigations carried out?
No. Under a CVA, your business continues to trade, and as such there is no need to carry out investigations into the directors’ conduct.
Do I have to use an insolvency practice?
Yes. A CVA must be implemented and overseen by a licensed insolvency practitioner.
How long do CVAs normally last?
Usually 5 years. However, this is not set in stone, and depends on the level of debt, and the amount that your company can afford to put into the arrangement.
What happens if I have rent arrears?
We would look to reach agreement with your landlord in the CVA as well – taking account of whether your business intends to continue from the same premises in the future.
How does the voting at the creditors meeting work?
Once the proposals have been sent to creditors, we negotiate with creditors on your behalf. Each unsecured creditor can vote for the value of their debt. Over 75% of votes by value must be in favour of the CVA for it to be accepted. Creditors can also suggest modifications to the proposal.
Can I continue using my existing bank facilities?
Yes, your day to day trading doesn’t change. Separate to your normal business, you make the CVA payments to the CVA supervisor, who distributes the monies to your creditors.