A CVA Good News Story
A CVA (Company Voluntary Arrangement) is similar to the personal IVA (individual voluntary arrangement), which allows a company with cash flow or debt problems to reach agreement with its unsecured creditors regarding repayment of all, or part of its debt over an agreed time period. CVAs are often not openly welcomed by creditors as the payback period is often long and companies can go out of business before completing the payback period.
However they can and do work in many instances. We have recently worked with a Language School that was trading worldwide, with particularly good client relations in Asia.
They could have liquidated and started again but the client considered that to do so would damage their reputation irrecoverably with the Asian market which very much frowns upon non-payment of debt.
Instead the client chose to place the Company into a Company Voluntary Arrangement, and with the agreement of creditors, pay them back 64p in the £1 over a fixed 5 year period, in full and final settlement.
The Company has now successfully completed that Arrangement and is free to carry on trading without restrictions, with its reputation intact.
On completion we were delighted to receive this note from our client – “We did it! With your help and guidance and patience, we did it. I, the school, and the Group owe you a lot of appreciation for how you saved us.
I will remember you and appreciate your work forever. “
A reminder that sometimes the quick solution isn’t the best answer and a longer term project may prove to provide the best return for all parties.