Creditors Voluntary Arrangement

Thinking of a Creditors Voluntary Arrangement? What Are The Options?

The term Creditors Voluntary Arrangement, or CVA, is a mixture of that and creditors’ voluntary liquidation. Both corporate debt solutions are made good use of, and have been on the statute book since the advent of the Insolvency Act 1986.

The creditors’ voluntary arrangement is available for those who have an insolvent business which can’t pay its debts as and when they fall due, but which, if given some breathing space, would be able to make regular monthly payments into a fund which could be distributed to creditors annually.

In practice, a company must be able to contribute at least £1,000 a month. For a business with a significant turnover, this should be easily manageable. It is often combined with severe cost cutting, which enables the business to re-structure itself and emerge leaner. On occasions it follows an administration, which may have first been used to protect the assets of the company from plunder from creditors taking enforcement action. In this way the CVA is a great protection against the action of creditors.

A version of the creditors voluntary arrangement can be used for a partnership, and is known as a PVA, or partnership voluntary arrangement. This will be useful for businesses like accountants, specialists and architects.

Most arrangements of this sort stay in place for 60 months and may also include lump sum payments at various stages, for instance if it is envisaged to sell property.

A creditors’ voluntary arrangement is not to be undertaken lightly as to fail it would mean that all unpaid debts would still remain due. It is worth bearing in mind that business fortunes can change over time, and a commitment that is entered into this month may not hold up 12 months later.

If you would like to talk about a creditors' voluntary arrangement or matters relating to it to an expert with 17 years corporate insolvency experience then enter your details into the web form below for a no-obligation chat.

However, if you need help with personal debt (rather than business related debt) go to our free debt management plan application form.

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