The Company Voluntary Arrangement (or CVA) is a rescue procedure for businesses, introduced by the 1986 Insolvency Act and improved more recently. It is still true that relatively few insolvency practitioners have experience of organising a CVA and making it work, however, Hodgsons have embraced this opportunity and successfully managed several cases through this process.
A CVA allows a financially challenged business to continue in operation, provided its creditors agree, and may thus give you the opportunity to become profitable again.
Under a CVA, a company can be re-organised to enable it to pay as much as it can to its creditors and also stay in business. The arrangement may involve delayed or reduced debt payments, capital restructuring or an orderly disposal of non-essential assets. This must be agreed at a meeting attended by creditors.
There is limited involvement by the court, and the scheme's implementation must be under the control of a supervisor who is a licensed insolvency practitioner. You can nominate any licensed insolvency practitioner to act as the nominee. If you decide to ask us, we will work with you to put together a workable proposal and, providing this is possible, we will hold a creditors meeting to consider the proposal whereby this will approve, modify or reject it.
To pass a CVA, a majority of 75% in value of the creditors
present and voting is needed. This is not an outrageously high mountain
to climb. If you have got this far, it will be because you can offer
your creditors better future results through the CVA than through any
of the other forms of insolvency procedure - not just because a CVA
will keep you in business.
If the arrangement is approved, the insolvency practitioner becomes the supervisor and implements the CVA in accordance with the proposal's terms - and your business can go on.