The Amazon effect has been a hot topic amongst businesses over 2019 as the retail giant has seen massive expansion...
If your company is insolvent then you are at risk of Compulsory liquidation,, however there are ways to stop this such as using a Company Voluntary Arrangement to pay back debts over a fixed period of time. Using an insolvency practitioner you can apply for a Company Voluntary Arrangement (CVA) and they will then administer it on your behalf. As long as all company directors and creditors agree then a CVA can be a good way of saving your business from Liquidation and continuing trading.
Can I Apply for A Company Voluntary Arrangement Myself?
You can only get a Company Voluntary Arrangement using a licensed Insolvency Practitioner, there is a charge to apply and administer a CVA. There is a common misconception that you do not need an Insolvency Practitioner and you can set up a CVA yourself however this is not true. Your Insolvency Practitioner will look at the amount of debts owed to creditors and work out an ‘arrangement’ taking into account how much you can afford to pay. This is a quick process as it has to be worked out within a month of appointing an Insolvency Practitioner. They will then write to your creditors informing them about the arrangement and they will be invited to attend a meeting to vote on the arrangement. For the CVA to be issued the creditors who are owed at least 75% of the debt must agree to it. This is a good way to avoid liquidation as the business will now be considered solvent and you can continue to trade, the scheduled payments must be made to your creditors through the appointed insolvency practitioner until the debts are paid off. If you don’t stick to the payment plan your creditors can apply to wind up the company and if you don’t get the 75% vote at the creditors meeting you could still face Voluntary Liquidation. The business will now be solvent and can start trading again. You make the scheduled payments to creditors through the insolvency practitioner until these are paid off. If you are facing problems then it is important to get insolvency advice sooner rather than later.
Related articles
