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The latest company debt news, expert blogs and articles
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By James Falla
#21347
A Company Voluntary Arrangement (CVA) is one of the options open to directors who are trying to save their company in the face of debts which cannot be paid. We consider the costs associated with a CVA solution.

To read the full article please click on the following link:

How much does a CVA cost?
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By Mark Bassford
#21351
Hi James,

An excellent article. I would add two points....

There are some things that you won't be able to stop paying for when accumulating money to pay for drafting the proposals.

These might include secured creditors, utility suppliers that may cut you off, landlords that may distrain or evict and HMRC and creditors with judgments who have the right to enforce.

The other point is on the costs matter. You correctly say that a CVA requires substantial time to draft by the proposed officeholder. It will also require much more effort by the directors of the insolvent company as they will need to prepare cash flow forecasts for at least two years.

If the value of the business is quite low then a pre-pack liquidation will often be cheaper, in the current insolvency market, than the initial fees and contributions required in a CVA.
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By James Falla
#21369
You are quite right Mark.

It is important to understand that if a company is saving to meet the cost of a CVA creditor's meeting charge, it clearly has to maintain its ongoing business payments. These would include things like utilities, HP, mortgage payments and/or ongoing rent. However if you are preparing a CVA you do not need to continue paying ongoing PAYE and VAT payments. You can allow these arrears to continue to build up and eventually be included in the CVA. This can be a significant advantage for businesses as it can really help with cash flow.