
What is a CVA? | Company Voluntary Arrangements Explained
What is a CVA? | Company Voluntary Arrangements ExplainedAfter a further telephone conversation with KSA our Regional Manager, Derek Robinson, met the directors.
KSA were appointed to assist the company with the production of a CVA proposals on 26th March 2013
The company had a turnover of £292k which was a fall of £44.5k year on year.
The company encountered financial difficulties due to:
• Under-capitalisation from the start.
• The company had committed to the lease and renovations for the new centre, however, funding arrangements necessary to fund the project were not made available.
• Since 2008 whilst operating profitably there have been cash flow problems and arrears with various creditors have mounted.
• 2009 due change in parental nursery place funding and closure of a local office turnover dropped by 10%
HMRC and trade creditor debt rose beyond comfortable levels.
The board identified these problems in March 2013 and decided to take professional insolvency advice to try and deal with the resultant cash flow pressures.
Before KSA was appointed, action was taken to reduce overheads and mitigate the loss. This included the reduction of the workforce with a non-replacement policy and a reduction of the working week for the remaining staff. The company also increased and widened its advertising activity outside the funding agencies and current spectrum.
The creditors
The bank was unsecured and provided a small overdraft facility of £10k.
The bank withdrew the overdraft facility however due to savings made from the restructuring the company managed to survive this.
Unsecured creditors
Total debt of £99,415 inc. HMRC at £64,000 (c.64%).
HMRC approved the CVA with standard modifications on 22nd July 2013 – CVA creditors meeting was held in Glasgow on 7th August 2013. And the CVA was approved by the body of creditors with a dividend of 40p in £1.
The CVA meant that 24 jobs have been saved!
What is a CVA? | Company Voluntary Arrangements Explained
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