When a struggling business appears to be viable with the prospect of becoming profitable again, and the company directors are willing to continue, a company voluntary arrangement (CVA) is the best method to protect against legal actions taken by creditors as well as protecting yourself against liquidation.

When should you set up a CVA?

When a struggling business appears to be viable with the prospect of becoming profitable again, and the company directors are willing to continue, a company voluntary arrangement (CVA) is the best method to protect against legal actions taken by creditors as well as protecting yourself against liquidation. A Company Voluntary Arrangement is an restructuring tool that can change a company who are looking like their on their way out into one that is secure and financially healthy- with all of its assets safe and ready to be rebuilt, you can aim towards establishing the company once again.

When do I know if CVA can be proposed?

A Company Voluntary Arrangement can be proposed at any time up until a winding order is granted against your company. If you already been giving a winding up petition, or your creditors are threatening to issue one then do not worry as you’ll still have time to set up a CVA and protect your company going into liquidation. With that said, you must be prepared and organised because if you do not act quickly, you will lose your chance or the opportunity in setting a CVA making it more difficult in paying back those debts. Consequently, if you are too late and a winding up order is granted, compulsory liquidation will therefore commence and from here any possibility of facilitating a recovery through any means is unlikely.

If you see your company entering administration, the administrator may propose a CVA during the course of the procedure; this will support the stature of your company and provide alternative routes in becoming financially stable.

CVA can be a safe haven

A Company Voluntary Arrangement is the preferred methods of most company directors and can really help in regards to resolving unsecured company debt problems within their struggling company. It’s a legally binding financial agreement which will allow your company to repay its outstanding unsecured debts within a required payment plan. This will prevent creditors ruining your company into the ground and it is the only formal rescue procedure that can be used to eradicate these debts.

It gives you a bit of breathing space because directors that place their company into a CVA do not face the stressful investigations they would face if they were to be constricted in liquidation. What is a positive element is that, if there was a winding petition in place, with a CVA, that petition would be dismissed upon approval and will give you a clear indication of when and where you’ll need to pay off the debts and make you feel at ease knowing your business will most likely keep intact.

Basically, a Company Voluntary Arrangement is there to give you a second chance, you might have failed to observe the fiduciary duty, yet arranging a CVA you’ll be able to find alternative solutions in securing your business. All you need to do is be prepared and act quickly laziness can make or break your business when it comes to liquidation