Frequently asked questions concerning CVAs
Please read the sections on Company Voluntary Arrangements and Individual Voluntary Arrangements to understand more about these procedures.
- What is the financial structure of a CVA?
- Are my current creditors frozen during a CVA?
- How long do I have to repay my creditors in a CVA?
- What if I can’t pay my creditors back in full from the CVA?
- How is a CVA approved?
- Who controls the company during the CVA?
- What are the costs of a CVA?
- How long will it take to get a CVA approved?
- What happens to my secured creditors in a CVA?
- Can the Company be Protected Prior to the Creditors Meeting?
What is the financial structure of a CVA?
Typically a monthly contribution is made into the CVA, which is distributed to creditors
on a regular cycle.
Are my current creditors frozen during a CVA?
Yes. Once the CVA is in place no enforcement action can be taken by pre-CVA creditors.
How long do I have to repay my creditors in a CVA?
Every CVA is different and a sensible time frame should be set.
What if I can’t repay my creditors back in full from the CVA?
A pence in the pound offer can be made. Remember this will ultimately need to be supported by a business forecast.
How is a CVA approved?
75% of unsecured creditors by value must approve a CVA. Remember this is 75% voting on the day. 50% of non-associated creditors by value must also vote in support.
Who controls the company during a CVA?
The existing Directors and management will control the company.
What are the costs of a CVA?
A Nominees fee will be charged, typically £2,000 – £3,000 depending on the business size to establish the CVA.
How long will it take to get approved a CVA approved?
Typically 28 days from the outset.
What happens to my secured creditors in a CVA?
- Secured creditors do not vote in a CVA
- They will need to be comfortable with the CVA and will often run, as before the CVA, during the CVA
- Remember secured lenders prefer a solution not a problem
Can the Company be Protected Prior to the Creditors Meeting?
Yes. If the circumstances require an application for Court protection prior to the Creditors meeting can be made. This protection will allow time for all creditors to consider the Company Voluntary Arrangement without fear that any one creditor may seek to upset the process.