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Company Voluntary Agreements

 / CVA: Business Rescue Expert FAQ

CVA: Business Rescue Expert FAQ

Can a company voluntary arrangement (CVA) stop bailiffs or a winding up
petition? How much does a CVA cost? We’ve compiled a list of our responses to
some of the questions directors most commonly ask us about company voluntary
arrangements. This should help you understand some of the practical implications 
of a CVA, but if you’ve any questions or would like to discuss CVAs in more detail, 
don’t hesitate to contact one of our business rescue experts directly.


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.


Take a look at some of our related services.

Business Rescue Expert is part of Robson Scott Associates Limited, a limited company registered in England and Wales No. 05331812, a leading independent insolvency practice, specialising in business rescue advice. The company holds professional indemnity insurance and complies with the EU Services Directive. Christopher Horner (IP no 16150) is licenced by the Insolvency Practitioners Association


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