Company Voluntary Arrangement
- A Company Voluntary Arrangement (CVA) is a formal arrangement between an insolvent company and its creditors for time to pay.
- If an insolvent company has a viable future, a CVA can be an effective procedure to avoid a liquidation and to pay creditors an affordable sum out of future profit for an agreed period.
- The deferred payments may not discharge creditors’ claims in full, but upon completion of the approved Proposal the balance of the remaining debts are written off.
- A CVA is administered within the Insolvency Act and Insolvency Rules. Consequently, the directors require the expertise of a regulated insolvency practitioner.
What MGA does to help
- MGA has been helping directors to launch CVAs since their introduction in the 1986 Insolvency Act.
- Drawing on this experience, MGA will ensure the directors prepare a carefully structured and thoughtful Proposal to save jobs and repay creditors more than they could expect in a liquidation.
- MGA will help directors to consult key creditors and other stakeholders to win support for the initial conceptual proposal of a CVA.
- MGA will support the directors to prepare a detailed Proposal for all creditors to consider at a formal meeting.
Fundamental components of a successful CVA include but are not limited to:
- A viable business that can return to profitability.
- Management accepting that change is necessary.
- Astute financial forecasting.
- Introduction of new working capital.
- A sustainable repayment plan to creditors over a realistic period.
MGA will guide directors to attain a viable CVA .