A CVA is a procedure that enables your company to put forward a proposal to its creditors that asks them to agree to accept a certain sum of money in settlement of debts due. It is a formal insolvency procedure and involves renegotiation of payments to creditors. The proposal ring fences the debt up to the point it is created and becomes part of the agreement.

How will Cowgill Holloway Business Recovery help?

When you initially approach us we become appointed as Nominee. It becomes our job to value your company assets and help with the production of a statement of affairs that shows why a CVA would be more favourable to creditors than liquidation. Once the creditors approve the CVA, we then become Supervisors of the arrangement.

Our duties include:

  • Assisting with the drafting of proposals
  • Liaising with creditors to obtain the relevant approval
  • Filing all necessary paperwork
  • Handling all correspondence from creditors
  • Monitoring the terms of the proposal
  • Agreeing creditor claims
  • Paying dividends to creditors after costs

Company Voluntary Arrangements
Case Study

Transport business:

This company was incorporated at the later end of 2003 to operate as a transport and logistics contractor.

In 2008, as a consequence of new contracts, the Managing Director anticipated a substantial increase in revenues and this required the relocation to a larger site with attendant costs. As a result of the recession, that began to take effect within the first quarter of trading from the new yard, the anticipated increase in revenues did not materialise, the result was that gross earnings did not cover the increased cost base. The recession also meant further competition for work, which put pressure on margins and further depleted income. In addition, a number of other factors such as increased fuel prices and a number of insolvent customers resulted in both loss of work and bad debts amounting to approximately 2150,000. Ultimately resulting in an adverse cash flow situation.

In the year prior to this annual turnover of the business was circa £4,500,000

The company had also built up significant arrears with HMRC for both PAYE and VAT who were threatening to issue a petition to wind up the Company.

Due to these factors it was clear that whilst the company was insolvent it should be allowed some breathing space and to continue trading, therefore a CVA was the best option available.

Cowgill Holloway Business Recovery were then instructed to assist the directors with dealing with both HMRC and the bank and to draft the proposal on their behalf. The CVA was approved at a rate of 64 pence in the pound over 5 years.