This is a deal agreed upon by a company and its creditors. Such a deal prevents your creditors from taking legal action against your company. It is a great business-rescue strategy that still maintains its ordeal. It portrays a clear and positive picture of your company, demonstrating how you are maximizing the interests of your creditors.
Purpose of a CVA
A CVA allows your viable company or firm to repay some or all of the debts from the future profits set to be gained, over the certain period of time you’ll agree with your creditors. The main purpose of a CVA is rescuing the company if facing insolvency while still protecting cash flow, rebuilding sales and accumulating profits.
Once your company regains its stability, you can begin to repay back what you owe within the set period of time. This process grants your business a chance to survive by taking any pressure off its directors whilst allowing them to comfortably control the business.
What is required To Have a Successful CVA?
These are some of the factors that will favour your chances of having a successful CVA:
Your business ought to be viable with high capability of making profit
The repayment plan should be properly structured such that you won’t have to pay much too soon or end up paying too much
The company should have appropriate levels of working capital
All partakers in the business’ activities must be willing to make changes in how the business is being ran
There should also be the willingness to work harder in order to turn around the business
Consulting the services of an experienced CVA practitioner would boost the likelihood of having a successful CVA