Company Voluntary Agreement FAQ
Thursday, 16 August 2007 01:28
What is a Company Voluntary Agreement?
A Company Voluntary Agreement or CVA is a legally binding contract between a company and its creditors.

Can we do this on our own?
No, you would need to instruct an Insolvency Practitioner (IP) to act on the company’s behalf.

Will I have to stop trading?
No, the idea of a CVA is to enable viable companies to carry on trading.

Do we need to have a business plan?
You will need to provide a Statement of Affairs to include Company history, Assets and Liabilities, Actual Profit, Projected Profit and finally a proposal to the creditors.

Who deals with my Creditors?
Once you have instructed an IP they will deal with all the creditors for you.

What happens if my Creditors are threatening to take legal action against me?
Your IP can apply to the court for an order to prevent any action during the time it takes for a CVA to be set up.

Does every creditor have to agree to the CVA?
No, as long as 75% of the Creditors agree the order will go ahead.

How long will the CVA last?
CVA lengths can vary but it will be worthwhile to be realistic, as you will have to make the agreed payments or the CVA could fail. It is normal for them to last 5 years.

What happens about the company share holders?
They to will have to agree but only 50% have to vote for the proposal.

Who would be appointed Nominee?
The company’s IP will normally be nominated by the Directors.

Will there be creditors and shareholders meetings?
Yes, the company will need to hold one for each i.e. Creditors meeting and a Share Holders meeting.

What happens if they do not agree to the company’s proposal?
If they do not agree you can renegotiate with them to see if an agreement can be found. If this fails Insolvency may well be the only option.

< Prev   Next >
Last Updated on Friday, 24 August 2007 02:39