Company Voluntary Arrangements (“CVA”) can seem complex, but they are really quite straightforward.

There is legislation that enables a company to make a private arrangement with all its unsecured creditors.

The CVA procedure is simply a formal mechanism that permits a business to reach a company debt compromise with the organisation it owes. This means companies with debt problems can negotiate and reach a compromise with its creditors on the repayment of its debt.

Imagine if your company could:

  • Freeze the company’s debt and any interest charges
  • Repay the debt in affordable monthly instalments
  • Prevent creditors from taking further action against your company
  • Write off a proportion of the company’s debts with creditors’ consent

The CVA can be tailored to suit the company’s and creditors’ needs. It could involve a five year payment plan or a full and final settlement in the form of a lump sum to creditors or a combination of the two.

The CVA avoids the need for liquidation, can save jobs and investments. The Supervisor is not required to investigate the directors’ conduct nor submit reports to the DTI as in liquidation. However, if the directors’ conduct has been severely lacking, the Supervisor must advise creditors of this and this could affect creditors desire to support the CVA.

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