If you have a viable business but it is not able to continue paying creditors in the full amount then by applying for a CVA (company voluntary arrangement) you should be able to keep trading and avoid administration.  At Commercial Finance, we can help you to draft the CVA and will set you up with an insolvency practitioner, negotiating with them to get the best deal for your company.  A CVA is a formal insolvency proceeding, but while it is in place no other legal actions can be taken up against your company as regards its debt.  This means that the same ownership will be able to stay in charge and trading will continue.

How CVAs Work

When your business is insolvent, meaning that you can no longer afford to pay your creditors, there are a number of different options to take.  If the company is having debt problems because it is not making enough money, and there is no prospect of that changing, then it would probably be better to wind up the business.  In many cases, however, there is a viable business model and the only problem is that there are too many short term financial strains.  In other words, the company has to improve cash flow, too much money is being spent paying creditors.  In a situation such as this a CVA can be all that is needed to get the business back on track.

A CVA can only be handled by an insolvency practitioner, and Commercial Finance is in contact with a whole network of them.  Different insolvency practitioners are more familiar and experienced with different sectors, and we will be able to find the one that is best for you.  They also have fees that have to be paid, and we will be able to negotiate these for you as well.  Of course your company directors will also have a large say in the drafting of the CVA and the experienced advisers from Commercial Finance can help to concoct the draft to be presented to your creditors as well.

Once you are set up with an insolvency practitioner, together you will drafted a proposal to present to your creditors.   This may involve writing off some of your debt, and at the very least will mean decreasing the amount that has to be paid on a regular basis.  It might also involve helping you to terminate certain contracts that are no longer helpful to your company anymore.  There are a range of different options that are available to allow the CVA to cut costs.

After the plan has been outlined it will be presented to your creditors.  Provided that 75% accept the proposal then it will be legally binding to all of them.  With this CVA in place it means you cannot be put into administration, and if you have shareholders they will stay in control.  The important point here is that you act as early as possible so that your creditors still believe that it is worth making this agreement with your company.  Also you are going to need an attractive CVA draft to present them with, which means getting a good insolvency practitioner, which we at Commercial Finance will be able to find for you. 

Why Commercial Finance?

At Commercial Finance we have lots of experience in drafting effective CVAs which will drastically improve cash flow for your company at the same time as satisfying your creditors. We will be able to set up the CVA quickly, which will include finding an appropriate insolvency practitioner who understands the trade sector that your company operates in.  If you would like to know more about CVAs or other insolvency procedures, or would like us to help you set up a CVA, then please feel free to get in touch.