Company voluntary Agreement (CVA)
Company Voluntary Agreements (CVAs) work in a similar way to Individual Voluntary Agreements (IVA), although are not as common but are available only to registered companies.
A Company Voluntary Agreement is an agreement between a company and it's creditors or shareholders to repay a percentage of debt which is outstanding over a set period of time.
Company Voluntary Agreements (CVAs) are an alternative to bankruptcy, liquidation or administration and may suit companies that have been experiencing cash flow problems which left them unable to repay their debts, but is once again could be trading profitably if the burden of debts are removed.
A Company Voluntary Agreement (CVA) allows a company to continue trading and prevents liquidation.
The CVA is dealt with by an Insolvency Practitioner who will set out the repayment proposals to all of the creditors. The creditors can then vote for or against the proposals.
As long as the creditors who vote in agreement to the proposals represent 75% or more of the total outstanding debt, the CVA will be deemed as accepted and is legally binding on all creditors, regardless of whether they voted.
Once a Company Voluntary Agreement has been accepted and put into place, this will then prevent any further action being taken against the company.
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