We have a great business, but cashflow is very poor. It can be a strongly viable company but we face threats from creditors. What can we do?"
There is a great solution called CVA (Company Voluntary Arrangement)
A CVA is a legally binding agreement with your company's creditors. What does it mean and how does a company voluntary arrangement work? This page will help you to discover what it does, understand how it works and how it can help you stop creditor pressure and turnaround your company.
Read our detailed guide for more free information, or you can download our free 120 page PDF guide
If you do not wish to read through all the guides and info on the site then you can call our support centre on 0800 9700539 for a no obligation confidential chat. Read on to see the benefits of a Company Voluntary Arrangement, and how it can help you.
If you give us a call we can advise you on which course of action suits your particular circumstances. We have years of experience with HMRC, banks, creditors, suppliers, shareholders, lenders etc and we know their likely impact on your business.
Company Voluntary Arrangement benefits for your company
- Company voluntary arrangements can improve cashflow, quickly.
- Stop pressure from tax, VAT and PAYE while the company voluntary arrangement is being prepared.
- We can stop a winding up petition and get it adjourned
- A company voluntary arrangement can rapidly cut costs. (see this case study)
- Company voluntary arrangements can terminate employment, leases, onerous supply contracts and all with NIL CASH COST.
- Also allows you to terminate property lease obligations and vacate premises with NIL cash cost (using our expertise.) (see this case study)
- We write the deal, you run the company and get the UK's leading company voluntary arrangement experts working for you.
- You can terminate directors and/or managers contracts as well. CUT COSTS FAST!
- Remove employees with no redundancy payments of lieu of notice costs (paid by the Government)
- Terminate onerous customer/supplier contracts.
- Board and shareholders generally remain in control of the company.
- Has much lower costs than administration, is not publicly announced like administration is.
- You do not have to say you are in a Company Voluntary Arrangement to your customers. ( see this case study showing this.)
- Finally, it is ALSO a good deal for creditors as they retain a customer and receive a some of their debt back over time, usually between 20p and 100p in every £1 of debts, depending on what your company can afford to pay back
- We can hive the business out to a new clean company, it can trade with customers and suppliers, old company gets a management fee to pay the creditors back.
- Check our CVA worries page if still unsure.
CVA Case study - Southern England based hair salon company
A simple description of a company voluntary arrangement!
Company Voluntary Arrangements are essentially a deal between the insolvent company and its creditors; This deal places a legal ring fence, called a moratorium, around the company and stops creditors attacking it. This allows a viable but struggling company to repay some, or all, of its historic debts out of future profits, over a period of time to be agreed.
Directors stay in control of the company, with KSA Group providing support. It can stop legal actions like winding up petitions, if you use a quality, experienced advisor. The directors need to be committed to saving the business. Also a company voluntary arrangement allows the opportunity for the business to be sold or refinanced.
The process has been part of UK law since 1986 and is one of the Government's preferred rescue options.
Keith Steven talks about turnaround and Company Voluntary Arrangements with the Telegraph. Read the article "A solution to insolvency"
Read what other directors have thought about the Company Voluntary Arrangement mechanism:
I wanted to drop you a quick note to let you know that today I have sent a final payment to Eric Walls and the creditors fund, which now completes the CVA process for the company.
The company is now in a very different place to when you, Hugh and then Eirlys helped us so much to get through the first few months before the CVA was approved. Having read through some of the testimonials on your website I can only endorse the comments about your team and the fantastic way they listen, help, sort out and restructure the business.
I am sure I am not alone in saying that most company owners and directors are pretty battle scarred before they get in touch with you but there is always a willingness to continue the fight for survival. We have, after all, created a business with loyal staff that have mortgages to pay. However, when we sit down and go through a five year plan there is a nagging doubt of whether I can pull the business through the process.
What was particularly helpful to me in those early days was the complete lack of judgemental comment and instead, very helpful comments on how to turn around a business and get it back to prosperity. The majority of my company income comes from advertising in our trade journals and PR retainers, the first areas that get cut in tough times. So, even though Eirlys was able to successfully keep our creditors and trade suppliers on side, top line growth was always going to be a problem.
I believe we came through the five years by making some major decisions that caused a number of problems in the first place. Our offices were far too big and costly, we had too many staff, and we had been overly loyal to some suppliers such as printers who had been charging too much for their services.
Throughout the five years we have not experienced any problems with suppliers, apart from our bankers (with whom we had taken out a business loan that was backed by our houses). This bank has been hopeless and completely useless throughout and I can’t wait to get rid of them.
My thanks again to you and the KSA team, we would not be here today without your help, thank you so much.
So how much does it cost?
This does depend very much on the total number of creditors, employees, the bank's position, and what level of negotiation is needed. In the end, a company voluntary arrangement is a deal and doing a deal involves talking to people and the stakeholders in the business. It helps if the company has good financial information and there is not a compressed timetable due to aggressive legal actions by creditors. By acting early this can be generally avoided. So how do we pay if we are in financial difficulty? Simply, once we are instructed all the creditors deal with us and we can effectively freeze payments to creditors until a deal is done. Some advisors say that a company voluntary arrangement is paid for by the creditors. This is a bit misleading and it is likely that personal guarantees will be requested to cover the payments into the company voluntary arrangement and further fees. What happens then if it fails??? Err... you will run up a large bill that you will be personally liable for. We do not ask for these personal guarantees. To discuss how much we charge then please call us on 01289 309431.
In September 2014 72 companies entered into a company voluntary arrangement as a way to restructure their debts and survive.
How to vacate premises
Help for retailers
Debt write off not subject to tax
Time to pay
Corporation tax issues
Advantages and disadvantages of the mechanism
Administration or a company voluntary arrangement
Pre Packs or CVA - The Great Debate
Vehicle operators Licence Issues
What happens in the event of failure
Author: Keith Steven