Is a Customer Voluntary Arrangement (CVA) right for my business?

A CVA may be right for your business if you currently insolvent but also profitable. Its main purpose is to give you find to manage your finances so that you can repay the debts you owe your creditors, including the HMRC.

How does a Customer Voluntary Arrangement work?

The process behind a CVA can be summarised in three main steps:

1. Your company becomes insolvent
2. You and your creditors agree on a repayment method
3. Once at least 75% of your creditors have agreed, you benefit from some advantages.

What are the advantages of a Customer Voluntary Arrangement?

Once you are at least 75% of your creditors agree to a repayment strategy, you benefit from the advantages of the CVA:

• The main purpose is to ease your cashflow pressures through deferral of payments
• Your historical debts are frozen so there is no further interest or costs involved
• No Liquidators or Administrators needed as you are still in control of the company
• You are not required to report on your conduct
• Repayment through a CVA is flexible so you pay what you can afford
• You creditors agree not to take any further legal action against you

Be aware, it is not always the easiest decision for the future of your company

It all sounds well and good being able to free interest and stop creditors taking legal action against you, however, a CVA is not a confidential affair. A notice of approval will have to be filed at Companies House which makes the basic details of the CVA available for the general public to view. This can have the knock on effect of creating problems in the future by finding it more difficult to borrow or sell as creditors and clients find it worrying you went through the CVA procedure.

For more information on how a CVA can benefit you and why or why not you should undertake one, our experts are on hand. Call us today on 01451 832533 to find out whether your company is right for a CVA or whether there is a better solution in store. We can help recover your business but need help from you in order to achieve a result.

About the Author

Mark Jefferson is a seasoned commercial finance professional with over 25 years’ experience in financial services, much of that spent providing funding to SMEs. Mark has worked with many other firms in a similar situation to yours. Call Mark on 01451 832533 and you can also follow him on Google+

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