A corporate voluntary arrangement is another name for a Company Voluntary Arrangement (CVA), which is an increasingly popular legal instrument which came about in 1986 under the terms of the Insolvency Act of that year.
A corporate voluntary arrangement allows the directors to keep control of the company while entering into an agreement to pay the creditors of the business under the terms of the CVA, which details how debts and liabilities will be approached under the various provisions of the Insolvency Act.
A CVA will allow a business which has known cashflow issues a period of time to repay its liabilities either fully or partially over a specified number of years. When the payments have been restructured, any money thus generated (for example, book debts) may be used as a source of working capital rather than paying the old debts.Restructured debt payments include money owed to HMRC and any other crown debts. A CVA may be considered a much better alternative to the various stresses of liquidation.There are other ways a company may be helped, aside from a corporate voluntary arrangement, or even in addition to a CVA. Other more advanced options include a pre-pack, which would separate the bad parts of the company from the good parts, sell them off and restart as a phoenix company which is free from the burden of the previous debt.
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