What are the benefits of a CVA? - Company Voluntary Arrangement

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Benefits of a CVA

A Company Voluntary Arrangement (CVA) is a deal between the company and its creditors, which allows the company to repay some or all of its debts over an agreed period of time, without fear of legal action being taken by the creditors.

There are many benefits of using a CVA, here are just some of them:

  • The company can continue to trade whilst resolving its financial difficulties
  • Creditors are unable to take any further legal action against the company whilst in the process
  • It's a constructive business rescue procedure
  • The process is often viewed positively by creditors
  • The process can improve cashflow
  • The business is given the breathing space it needs to deal with its financial difficulties
  • The process can quickly cut the companies costs
  • The process allows the business to restructure, therefore getting rid of unnecessary contracts and leases (this can often includes employment contracts and landlords leases)
  • The Directors remains in control of the business throughout the process
  • It's a cost effective process and cheaper than liquidation
  • The creditors interests are often protected
  • The process allows structured payments to be made
  • Directors can initiate the CVA
  • The arrangement is legally binding
  • The business can continue trading, and can work its way out of debt
  • The business is given time to restructure the organisation so that it can return to profitability.
  • The directors conduct is not investigated as part of the procedure

The main purpose of a CVA is to rescue the company, protect cashflow and rebuild sales and profits. Once the company is back on its feet, it can then beginning to repay what it owes over a period of time.

A CVA is a constructive and positive process which gives the business an opportunity to turn itself around without the risk of further action being taken against it.

Getting advice from the professionals

If you are considering a CVA or think this may be the right process for you, it is worth getting some professional advice before taking any action. By working with professionals you can be sure that you are making the right decisions for you and your business. If a CVA is right for you, we can help you every step of the way.

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This website has been written and intended for registered limited companies in the UK only. The site contains general information and resources for limited companies only in financial trouble. Insolvency Helpline only work with limited companies to offer solutions for their business debt problems. Insolvency Helpline cannot offer help or advice any other entity except limited companies. Insolvency Helpline does not advise individuals, sole traders or partnerships seeking debt advice. If you are an individual, sole trader or partnership seeking advice, we recommend using an alternative service.

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