Just a quick note to say a big thank you to all the staff at KSA, our CVA was passed today by creditors voting in an overwhelming number including HMRC to accept the proposal as prepared by KSA.
The road to reach today’s conclusion has been bumpy, but at each stage your team has supported and guided us through the issues and we have reached a very satisfactory outcome to the benefit of customers, staff, all creditors and shareholders.
Company Voluntary Arrangement or CVA
A company voluntary arrangement or CVA is a powerful tool that was introduced in 1986. The Government wanted to see more viable companies rescued and continue to trade.
Many insolvency firms ignore this option preferring the control and the larger fees of administration It requires creativity, determination and often hard work to drive a CVA rescue through.
Many companies struggle with debts as a result of things like high start up costs, bad decisions, bad luck, the list goes on! They often feel they are carrying a “ball and chain” of debt around behind them. As hard as they try to grow, the “legacy debts” can end up killing the company.
Using a CVA some of this debt can be discounted (or compromised), but just as important the debt is deferred with a legally binding moratorium. This can buy the time they need to reorganise.
Powerful CVA case law allows the removal of employees and the termination of onerous contracts such as property, shops, motor vehicles and so on, without the company having to pay redundancy cost or termination fees.
Using a CVA debt can be cut free and the business can recover. Still there are hurdles and creative use of Hive Downs and refinancing can avoid the stigma of pre-pack administration which is now being slowly legislated against as a restructuring tool.
The directors of KSA Group have been writing company voluntary arrangements since 1995, in that time we have worked with almost every type of company with many of the common problems referred to above. This tool is useful for small, medium or large companies., it is a reasonably quick process and can be very cost effective.
Much maligned and misunderstood the CVA is great framework for recovery of a viable business, but is of course no panacea.
If you are thinking of making a proposal to your creditors, one of their critical prerequisites is your credibility.
Think about it: many of them will have been chasing you for weeks and may even have issued a Winding Up Petition. If you come back to them with what they may see as yet another promise about to be broken, or with a less-than-professional proposal to pay them, you can understand that they will need some convincing. Read our page on Financial Forecasts in a CVA -that gives an insight into the whole process.