In essence, a Company Voluntary Arrangement (CVA) is a formal agreement between a company and its non-secured creditors to offer them a better outcome than they would receive if the company were forced into an alternative insolvency process, namely administration or more typically, liquidation.
It usually involves allowing a company to continue to trade following a period of restructuring in order to realise certain assets and/or pay profits into a CVA fund over time (up to five years). The CVA fund is then used to repay creditors in part or full.
In mid-2013, following the recommendation of their accountant, we were approached by the directors of a plc to assist them with formulating a recovery strategy for their business.
Whilst it has been another challenging year, not only has the company survived, it is meeting its obligations under the CVA and now has an opportunity to flourish over the long term. The board remain grateful to the companys stakeholders, and in particular its creditors, for their understanding and continued support.
Paul and Tom as Joint Supervisors of the CVA will shortly issue a first interim dividend to creditors on account of a projected repayment in full over the remaining four years of the arrangement. A great outcome considering that the company faced imminent liquidation just over a year ago.
Please accept our sincere thanks for your professional leadership in relation to the CVA Proposal and at the meeting of creditors today It was an impressive outcome; your experience and expertise shone through.
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