subject: Company Voluntary Arrangement - Your Business Financing Solutions [print this page] Managing a business is certainly not easy, particularly during times when the economy is in a slump. Some small businesses have been forced to shut down operations due to the lack of funds. Aside from day to day expenses, the company may have other obligations to creditors such as loans, leases, etc. Sometimes, mismanagement can be a cause of turmoil for a company. But instead of giving up the business, do you still have other options?
In this article, let?s talk about a business financing option known as CVA or Company Voluntary Arrangement. What is it and how can it help business owners solve their financial problem?
The Basics of CVA
A Company Voluntary Arrangement is an agreement between administrators of a company and creditors. Under the CVA, creditors agree to get paid at a later time, giving the business a chance to recover. The future profits that the business will gain will serve as the payments to the creditors. In the meantime, the business can use the existing funds they have for the important cost just to save the company from closing down.
In order for a CVA arrangement to be successful, an entrepreneur must ensure the he/she can make the business profit stable when a financial help is available. Otherwise, repayment can become a problem. If you see that all you need is additional funding to keep the business from going bust, then get in touch with a professional CVA personnel.
When applying for a CVA arrangement, a team of business professionals will evaluate the status of your business, paying special attention to its finances. Once approved, the application process can be started.
First, a proposal must be submitted to the State Court to prevent any creditor or lessor from taking action against the company or its property for up to 28 days. Afterwards, the proposal be sent to the appropriate creditors. Having atleast 75% affirmative votes is needed from the group of creditors.
Once the Company Voluntary Arrangement votes have been casted, the business?s liability to its creditors is temporarily cleared. Next, the repayment terms will be set. As The business or company who applied for CVA is expected to pay the creditors at a designated date within the agreed time period.
Company Voluntary Arrangement and Your Business
Banks, creditors and the government is inclined to give financial support for businesses that need to be rescued from the risk of failure. If you want to avoid insolvency or liquidation, it is an option that can save you time and money. It is also a confidential arrangement so there is no need to worry about damaging the reputation of your business or getting negative publicity.
Bear in mind that in order to work, the administrators or directors of the company must be willing to work hard for the recovery of the business. The management of the business has to be evaluated to know if a restructuring or changes in strategy must be done. To fully understand the terms of a Company Voluntary Arrangement, it is best to seek assistance from an attorney specializing in business.
Copyright (c) 2009 Irish Taylor
by: Irish Taylor
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