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What happens if I enter into a CVA and then can't keep up the payments? Will I be personally liable for any debts?

The above question was asked by a potential client and we feel that it would appropriate to respond to this.

Firstly, a CVA is a Company Voluntary Arrangement so their is NO automatic transfer of debts to the individual. It is possible that a director may have personally guaranteed the debts of the company so, in that instance, yes they would be liable. Of course, that would have been the case whether the business went into a CVA or not and subsequently failed.

So, if the company is not able to keep up the payments that does not mean that the company voluntary arrangement will be stopped and the business go into liquidation. As supervisor, we would look to see if we can make a modification to the arrangement. This would mean that we would have to call another creditors meeting and put out an amended proposal. One quite common change is to extend the period that the CVA runs for. So instead of 3-5 years we may look at extending to 5-7 years. Normally, but not always,the creditors do not wish to see a reduction in their total overall dividend. Of course, any modification will need to be voted for by the creditors.

If the company is simply not viable anymore and cannot continue to meet its obligations then as supervisor we will petition to wind the company up. It is still possible to go into a creditors voluntary liquidation but that would have to be handled by different insolvency practitioners as otherwise we would have a conflict of interest.

I am a creditor/supplier of a business in a CVA what if it fails?

As a condition of the CVA the company must not increase its liabilities to any of its creditors. Therefore you must contact the supervisor of the CVA to point out that you are not being paid. In fact if a new debt is building up then you are still able to take any legal action necessary to recover the debt. It has to be a NEW debt and not contain the debt that is bound by the CVA.


I am already in a company voluntary arrangement that was organised by another insolvency practice but I can't keep up with the payments. The supervisor is unhelpful what can I do?

Some CVAs do fail and it is often as a result of badly drawn up proposals where the company tries to pay back too much too quickly or the costs are not cut quick enough at the outset.

Well, there maybe a solution to the problem in that someone may want to buy the business, restructure and recapitalise it. We do have contacts and access to some funds that can help with this. See our CVA Rescue site by Cheswick Capital

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