Where there has otherwise been a viable business, or there is value in the company’s brand, it is often preferable to try and rescue the business via an insolvency process. Depending on the company’s circumstances, this can be through either a Company Voluntary Arrangement (“CVA”) or an Administration.
Company Voluntary Arrangement (“CVA”)
Where a business has encountered trading difficulties and cash flow problems, sometimes a CVA is the more appropriate option for directors. It is a formal insolvency process but management remain in control and the appointed Insolvency Practitioner merely supervises the conduct of the CVA.
A CVA provides a company with an ability to compromise its debts with its creditors without affecting its secured creditors. It is often used as a vehicle to finalise a restructure of a business that has been underperforming and cannot overcome its financial difficulties without external assistance. If successful, the CVA allows the company to turnaround its business.
Our team work alongside management and stakeholders to prepare projections, proposals and the implementation of the plan, and continue to be available to management once the proposals are approved so that the turnaround can be effectively completed.
The Administration process is the most high-profile of all corporate insolvency procedures. It is often used as a rescue procedure, or maximising realisations for the benefit of creditors when an insolvency process is required as well as saving jobs.
An Administration can be used as a vehicle to facilitate a going concern sale, whether that is through an accelerated process (“pre-pack” Administration) or following a period of trading the business in Administration. It can also be used as a controlled wind down of a business, where a purchaser is not appropriate or cannot be sought.
Our team has the expertise to be able to work with the relevant stakeholders to ascertain the most appropriate strategy before implementing it following the appointment.