A Licensed Insolvency Practitioner (“IP”) is approached - they will assess the Company situation and decide whether a CVA is the most appropriate solution, keeping both business and Creditors in mind.
If recommended by the IP, a CVA proposal is drafted following a detailed review of the Company, its liabilities and assets.
The Company directors may agree its terms or request amendments, but the IP must be satisfied that any final proposal has a reasonable chance of success before proceeding.
Upon agreement the final proposal is filed at court, given a legal originating number, printed, and then copies distributed to Creditors.
The IP arranges separate decisions for Creditors and Shareholders not less than three weeks following the distribution of the CVA.
The proposal is approved if 75% or more of the Creditors (by debt value), vote in favour of the CVA, including postal and proxy votes.
A vote is also taken at the Shareholders’ decision, with a majority of 50% or more (by debt value) required for the CVA to be approved
The IP chairs each decision, and on successful approval issues a report to the court and all Creditors within four days. The report details the outcome of each decision - the results of each vote.
The CVA takes effect as from the date of the decision- no action can then be taken against the Company by its Creditors unless there is a default or the debt was incurred post CVA approval, in which case it will probably result in the failure of the CVA and potentially the Compulsory Liquidation of the Company.
So, if your business is potentially viable but struggling with cash-flow problems or facing threats from Creditors such as demands or even a Winding-Up Petition, a Company Voluntary Arrangement could help bring an end to Creditor pressure and revive your Company.
If you think a CVA might be right for your Company, get in touch today for a confidential consultation with no obligation.