What is a CVA?

A CVA is the tool by which Directors of Limited Companies can put together a proposal which allows for the Company to continue trading, despite the business may be in a period of financial difficulty and under financial pressure from its creditors.

The proposal document can include a request for debt forgiveness but must be structured so that it is fair to all concerned including the Directors, the Shareholders and the Creditors. A proposal that is deemed unfair, or unduly prejudicial to any given party, need not be accepted and will not be successful. So long as the terms are fair, reasonable in the circumstances and viable a CVA is an excellent way to ensure the survival of a business.

The ultimate desire with a CVA is for the Company, its assets and its business to exist at the end of the CVA; having included its debts into the arrangement. This allows the Company to have a fresh start on successful completion and exit of the CVA; completely debt free.

A CVA differs from other modes of Corporate Insolvency in that the directors remain in control, albeit under the supervision of a Nominee/Supervisor (Insolvency Practitioner) for the duration of the arrangement.

Our team at J3 Debt Solutions can assist you to prepare a proposal. For more information on CVAs, please contact a member of the team and we can talk you through the finer points of the process.

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