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CVAS SOLUTION FOR POST COVID-19 BUSINESSES

Amid ongoing COVID-19 restrictions on business, specialist restructuring and insolvency advisers Dunedin Advisory predicts there will be more take up of Company Voluntary Arrangements (CVAs) as a post pandemic rescue mechanism.

Angela Paterson, Associate Director at Glenrothes-based Dunedin Advisory, said:

“CVAs are a means of rescuing viable businesses that have experienced cashflow difficulties or, in the COVID-19 climate, suffered from extensive loss of trade during the lockdown period.”

Governed by insolvency legislation, a CVA allows a company to negotiate with creditors regarding how and when funds will be paid. This provides much needed breathing space and time to trade out of difficulty.

If successful, it allows the company to survive and retain jobs whilst managing payments to creditors. The company management remains in control of the company operations and day-to-day running.

Creditors can be managed in several ways and, if 75 per cent agree, the arrangements can proceed for all creditors. The CVA typically lasts for two to three years but, if the process fails, the company is then placed into liquidation.

Companies must work with a licensed insolvency practitioner (“IP”) firm, like Dunedin Advisory, to devise a workable proposal.

The IP must sanction the scheme and agree to be the ongoing CVA supervisor whilst it is in operation. Company directors must demonstrate that the company is continuing to meet the terms of the CVA proposal agreed with creditors.

Dunedin Advisory is offering businesses up to half a day free consultation to discuss options.

Contact Angela Paterson to book your free consultation - 01592 630085 enquiries@dunedinadvisory.com

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Picture caption: Angela Paterson, Dunedin Advisory

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