What are the advantages / disadvantages?
- Rescuing the company / avoiding liquidation
- Giving the company the opportunity to write off debt that it cannot afford over time
- Allowing the directors to keep control of their Company
- Ringfencing out creditor action
On the face of it a CVA might sound like the perfect solution to some directors but it is not always that straightforward.
In our experience CVA’s tend to have quite a high failure rate in the one or two years after they have been approved.
Directors will need to consider what caused the company to have financial problems in the first place and make sure they have solved those problems so they do not happen again.
That said, CVA’s have their place and are very useful for allowing a company to continue trading in the right circumstances.