The process of applying for a Company Voluntary Arrangement (CVA) involves several steps and requires careful planning and execution. Here is an overview of the typical process for applying for a CVA:

 

Initial Assessment:

Identify the need for a CVA: The process usually begins when a company recognizes that it is facing financial difficulties and may be unable to meet its financial obligations as they become due.

Seek professional advice: Engage a licensed insolvency practitioner (IP) or qualified advisor experienced in CVAs to assess your company’s financial situation and determine if a CVA is a suitable solution.

 

Proposal Development:

Engage an insolvency practitioner (IP): If the assessment suggests that a CVA is a viable option, appoint a licensed IP to guide you through the process.

Draft the CVA proposal: The IP will work closely with you to prepare a comprehensive CVA proposal. This proposal outlines the terms and conditions of the arrangement, including the proposed repayment plan, the duration of the CVA, and the contributions from the company.

 

Creditor Consultation:

Share the CVA proposal: The CVA proposal is shared with all known creditors, including banks, suppliers, and other stakeholders.

Arrange a creditors’ meeting: A formal creditors’ meeting is convened, during which creditors have the opportunity to review the proposal and vote on whether to accept or reject it. Creditors must receive at least 14 days’ notice before the meeting.

 

CVA Approval:

Secure creditor approval: For a CVA to proceed, it must be approved by at least 75% of the creditors (by value) who participate in the vote. Once this threshold is met, the CVA is considered approved.

Implement any approved modifications: If creditors request changes or modifications to the proposal during the meeting, these may need to be incorporated into the final CVA.

 

CVA Implementation:

Begin CVA payments: Once the CVA is approved, the company begins making regular payments according to the terms of the arrangement. These payments are typically managed by the insolvency practitioner overseeing the CVA.

Compliance and reporting: The insolvency practitioner monitors the company’s compliance with the CVA terms and reports on progress to creditors as required by law.

 

Completion and Discharge:

Successful completion: When all payments under the CVA have been made, and any other conditions have been met, the CVA is considered successfully completed.

Discharge of remaining debts: Upon completion of the CVA, any remaining unsecured debts included in the arrangement are typically discharged, and the company can continue its operations free from the burden of those debts.

 

Continued Monitoring (if required):

In some cases, especially for larger and more complex CVAs, ongoing monitoring and reporting may be necessary to ensure compliance with the arrangement’s terms.

 

Throughout the CVA process, it’s crucial to work closely with your appointed insolvency practitioner or advisor, as they will provide guidance, facilitate communication with creditors, and help ensure that the CVA is executed effectively. Properly managed, a CVA can provide a struggling company with the opportunity to restructure its debts and secure its financial future while continuing to operate.