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 .

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