CVAS
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A company voluntary arrangement (CVA) is a means whereby a company can reach a deal with its preferential and unsecured creditors to vary the timing and/or the amounts due to them, which is binding on all these creditors as long as a majority agree.
Further details about the technical aspects of company voluntary arrangement are described through the link. CVAs can often be used following an administration to gain the protection and powers of that procedure. Where a CVA is used on its own, the role of the insolvency practitioner is much reduced with the resulting benefit on costs and profile.
Like administrations, CVAs are highly compatible with Portland's approach towards saving companies and their businesses.
- They are intended to encourage creative, flexible and practical ways to avoid better winding up
- They are based upon the close involvement of creditors and carrying their trust
- They allow a period of protection to implement real business improvements
Even where the procedure is used as a form of winding up, we have used CVAs creatively to achieve better outcomes than liquidation by cramming down creditors prior to a sale of the company or simply by avoiding statutory costs.
- CVA Examples
- CVA as a solution to a company overstretching itself
In this example, Andrew used a CVA as a quick and simple means to gain a moratorium when he overstretched himself.
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- Using CVAs to realise tax losses
CVAs have a number of tax advantages and specialist advice was needed to ensure that James and his colleagues realised as much money as possible for the accrued losses.
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- Using a CVA to realise assets effectively
Trying to realise value for the supporter database of charity in liquidation would have been a nightmare. Look how we used a CVA to provide a simple - and highly rewarding - solution for Bill and his fellow trustees.
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- Using a CVA to acquire a struggling business
Most advisors would simply move immediately to sell a business out of an insolvent company. But sometimes third party rights make it difficult to transfer key business agreements. A more intelligent and creative approach is to use a CVA to cram down the liabilities and sell the company still holding the agreements. See how we achieved this for Toby.
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- Using a CVA to survive and prosper
Derek and his colleagues had the determination to save the business and we had the technical skills to buy him the time.
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- Thwarting the bully customer
A major customer might think he has you over the barrel and with no choice but to accept his derisory offer. We knew differently. So does Stephen.
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- CVAs can effectively implement group restructuring
CVAs can be used to obtain creditor approval to a restructuring plan and the one we proposed allowed Tim to implement a creative solution to his problem.
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- Thanks to CVAs, large bad debts need not mean the end of the road
A major bad debt need not be the end of the road with some sensible advice and the goodwill of creditors. Ask Stephen in this example.
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- CVAs can effectively implement a shareholder rescue
CVAs can allow shareholders and creditors reach a sensible compromise and allow the company to survive. There is no limit to the lateral approach and the flexibility to take account of future circumstances, as we showed John's client.
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- CVAs avoid TUPER
If you want to reduce the employee structure prior to a sale of a business as a going concern, then more likely than not the purchaser will assume responsibility for redundancy costs under TUPER (Transfer of Undertakings Protection of Employment Regulations). A more advantageous way to proceed to maximise the price for all creditors is to reduce the workforce and implement a CVA to bind in the resulting liabilities prior to a sale of the company, which avoids any employment transfer.
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