Fast-tracking business survival during times of financial distress
As the coronavirus pandemic continues to batter businesses and attack livelihoods, your business may be one step away from collapsing under the weight of unpredictable trading conditions and reduced custom. Healthy businesses with comprehensive track records of attracting great profit have been blighted by economic instability as a result of Covid-19, left fighting for survival. If your business is falling short of funds, struggling to maintain payments or no longer has the necessary capital to replenish stock or invest in the service, failure to seek an urgent solution could result in becoming insolvent.
A struggling business can rapidly decline over time, highlighting the importance of time sensitivity when searching for company rescue services. As a direct response to the coronavirus pandemic, selected business rescue professionals and licensed insolvency practitioners have developed urgent restructuring solutions to rejuvenate company health. A Fast Track Company Voluntary Arrangement (CVA) can help rehabilitate your viable business within a constricted timeframe, compressing a traditional Company Voluntary Arrangement into as little as six weeks.
What is a Fast Track CVA?
A Fast Track CVA is a company restructuring procedure for ailing businesses close to becoming insolvent. If the business has a realistic prospect of recovery, a CVA can help turnaround the bleak future of your company and protect it against legal action from creditors during the process. A Company Voluntary Arrangement grants struggling businesses the chance to recover from the weight of their financial burden by entering a payment plan. The process will be managed by a licensed insolvency administrator who will open the door to negotiating payments with creditors with the view to alleviate the business from pressure.
The company restructuring process allows you to split your payments into one affordable monthly instalment, lasting three to five years. In some cases, the remaining debt may be written off at the end of the CVA. If your business is struggling to raise funds and is on the firing line of creditor pressure, a Fast Track CVA is a speedy and efficient way to turn the fortunes around for the company.
Is a Fast Track CVA suitable for my business?
This route can provide a helping hand for struggling businesses, however, to qualify, your business must be insolvent or contingently insolvent. The insolvency practitioner must believe that the business has a realistic prospect of recovery and enough funds to make repayments. For the business to successfully enter the process, 75% of creditors by value must agree to this. If you are confident that you can make the proposed repayments, creditors are likely to agree as this route typically guarantees returns.
What is the typical Fast Track CVA process?
A Company Voluntary Arrangement typical takes up to two months, whereas, a Fast Track CVA compresses this process into as little as six weeks, suitable for businesses adversely impacted by the coronavirus pandemic. The route typically consists of the following steps:
Enlisting a licensed insolvency practitioner
A licensed insolvency practitioner will be able to advise you on whether this route is available to your business and if your company can be rescued. Depending on the provider that you use, a number may offer a free initial consultation to help you understand the options available to you, resulting in a proposed CVA if suitable.
Creditors notified of CVA and invited to vote
The CVA proposal is lodged at court and distributed to unsecured creditors, inviting them to vote on whether to accept or reject the proposal. If 75% vote in favour, the Fast Track CVA process will commence.
Agreed monthly instalments will be made by the business to the insolvency practitioner which will then be distributed to creditors, as agreed. The CVA will typically end after six weeks, however, payments will continue over the agreed full term.
This route is designed to provide long term support to the business and immediate protection against a winding up petition which could otherwise force your business into compulsory liquidation. The coronavirus pandemic continues to test even the healthiest of businesses, interrupting trade and erasing core trading seasons. By plugging your business with the necessary support, you can protect your business from further deterioration.
