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Over the years, UK Bankruptcy has assisted countless company directors and sole traders with their business dilemas, offering comprehensive management services for distressed businesses and limited companies, providing an 'all encompassing positive solution to any negative business situation'.
A voluntary arrangement for a company is a procedure whereby a plan of reorganisation or composition, in satisfaction of its debts, is put forward to creditors and shareholders. There is limited involvement by the Court and the scheme is under the control of a supervisor.
In a CVA, proposals are drawn up which may involve delayed or reduced payments of debt, capital restructuring and an orderly realisation of assets.
Creditors must usually agree to accept less than they are owed and, usually, to be repaid over a longer period of time. CVAs are never an easy option for the company, as creditors are unlikely to agree to anything that does not offer substantially better terms than a less rescue–orientated insolvency procedure.
A meeting will be held to present the directors’ proposals to creditors, 75 per cent (by value) of creditors present or by proxy must vote in favour of the arrangement for it to be binding on all parties. The arrangement is supervised by a licensed insolvency practitioner who, in many cases, will have advised the directors on the structure of the arrangement. However, on successful completion of the CVA the company’s legal entity will remain substantially unaltered and the directors will be free to grow the business in whatever way they choose.
Putting a CVA in place, however, does not necessarily tie the directors to the company: it can provide a vehicle to sell a business to new management too.
An administration order is an order of the court and an administrator is an officer of the court with similar powers to an administrative receiver.
An administration order will only be granted if one or more of the following is possible: survival of the business (or part of it); better realisations than from a winding up; a CVA or arrangement with creditors that the court is satisfied has a realistic prospect of success.
Other Procedures Schemes of Arrangements and Members’ Voluntary Liquidations can also be used to ensure the survival of part of the business.
Within the context of a rescue these procedures are usually only used in specific circumstances – for example, schemes of arrangement are often used as an alternative to liquidation for insurance companies.
Call Freephone 0800 5 977 977 to speak to an advisor, or take the first step towards finding a solution by completing the online questionnaire and one of our advisors will contact you and discuss options for you to consider.
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