We Cannot Use The CVA Mechanism Because: Or the classic worries we have heard for the last 13-14 years doing CVA’s!
So you are considering a CVA, or your advisors (preferably KSA Company Rescue of course!) have carefully recommended using the CVA to rescue and restructure the company. But the directors have a lot of fears and worries about taking this path.
Clearly this is a huge decision for the directors to make. Make it wisely by reading all of the relevant pages on this site.
No you will not. In over 200 cases people have said this to us and we understand why. But in practice we have rarely seen a customer walk away from a business that is delivering its products and services; well and on time. Shouldn’t that be your focus?
Stop firefighting and get back to doing your main roles. This way customers will stick with your company.
But keep firefighting and sooner or later your performance will fall and their business may suffer. THEN you may lose them.
Many people say we cannot tell our customers that we are “doing a CVA” or they will walk away. That is your decision and one that should be based upon knowledge of the business relationship, their requirements and any contracts. Sometimes the best answer is to tell them with us in attendance. Often this is better than a competitor telling them that you have “gone bust”?
Think what you would feel if a major supplier did not tell you of their problems and their plans to deal with it, but instead they hear from a local rival that you have gone into liquidation?!
Yes they will. They need to maintain their sales to your company, as much they don’t like losing the money owed. We spend a lot of time on “creditor liaison”. By carefully explaining what the company is doing, how it will be in their best interests and asking them to work with the company and ourselves we ensure that creditors are kept informed and on side.
Don’t expect any credit terms or any favours, but being honest and open with them pays dividends in the long run. After all, it would actually be simpler to simply liquidate and walk away wouldn’t it?
You are trying to maximise creditors’ interests by doing the CVA thus it’s in their interests to work along with the plan.
Generally they will stay. If they walk out they will lose any employment rights and will not receive any redundancy, lieu of notice payments from the company or the DTI. Further, they will not be eligible (generally) for unemployment/job seekers benefit.
So we recommend being open and honest and working out a plan for and with the employees. Proper communication is vital.
Some employees may lose their jobs as part of the restructure; this is painful and at times inevitable. We can work with you to achieve this.
Again this is simply not true IF a cogently structured plan and a well, presented approach to the bank is used.
Most banks are much more supportive now of “out of court” restructurings like CVA as it avoids the usual huge asset meltdown and costs of say administration. Although the CVA cannot affect the rights of the bank or lender they are stakeholders and should be closely involved in the process.
Yes they will if it is a properly structured, well thought through plan and the company has been compliant with tax rules in the past.
The HMRC agency that decided on these proposals is called the Combined Voluntary Arrangement Service. Currently it votes in favour of c73% of all proposals. However, we have a >95% approval record.
Completely and utterly false! There is no minimum or maximum amount or time frame. But you need a good quality well planned proposal. A 5 year period is the norm and in our CVA’s around 35p in £1 is the average minimum amount repaid.
Still got questions? then click here for CVA’s FAQ’s or here for a flowchart or give our team of advisors a call on 0800 9700 539 now, or contact us by email: info@companyrescue.co.uk