How Do I Get Out of My CVA If I’m Behind With My Contributions?
A Company Voluntary Arrangement (CVA) can often be a lifeline for businesses facing financial challenges, as it provides a structured plan to repay debts and regain stability.
But what if you find yourself falling behind with your contributions? Falling behind on CVA contributions can create you and your business additional challenges and must be taken seriously. After all, a CVA is a legally binding agreement between you and your creditors, so breaching any terms of the contract could result in serious consequences for your company – and the CVA could even be terminated.
If you are falling behind with your CVA contributions, then the first step is to seek professional advice and support immediately. Try not to panic – it’s not impossible to overcome.
Why am I falling behind?
If you are falling behind with your monthly contributions or find that you are unhappy with the terms of your CVA, then your CVA might have been mis-sold. At Bridge Newland, we believe that CVAs should only ever be the solution if thorough cash flow forecasting is done to ensure the CVA is definitely going to be a success.
Our industry experience suggests that a company in CVA will generally fall behind with their contributions because:
- They are uncomfortable with paying all of their profits into an arrangement for up to five years
- They are having trouble obtaining credit
- They are experiencing lower sales
If this sounds familiar and you want to get out of a failing CVA or want to explore alternative insolvency processes, then contact the experts at Bridge Newland. We are here to provide you with the guidance and support you need to make decisions you feel comfortable with.
What should I do if I’m falling behind with my contributions?
1. Assess the situation
Begin by thoroughly evaluating your current financial situation. Consider why you are falling behind on your CVA contributions. Is it due to temporary cash flow issues or are your financial issues deeper than that? Having a better understanding of the root causes will help you develop an effective plan moving forward.
2. Review and revise your CVA
Work closely with your current CVA Supervisor to review and potentially revise your CVA. It might be necessary to renegotiate the terms of the arrangement – however, it is not always guaranteed that creditors will be open to this.
3. Consider alternative insolvency procedures
If the creditors reject your proposed revisions and you are unable to pay your contributions, then the CVA will fail. To avoid being sent a winding-up petition, you should seek advice from the Insolvency Practitioners at Bridge Newland as to what other insolvency procedures are available.
If a CVA has failed but you still believe your company has a future, you can explore recovery options. For example, company administration involves an Insolvency Practitioner taking control. Alternatively, pre-pack administration or liquidation is when the existing company is sold to a new company (sometimes referred to as a ‘phoenix company’). In many cases, the assets of the current company are sold to existing directors or managers who are then able to set up a new company, but without the debt.
At Bridge Newland, we can discuss what recovery options might be available for you, depending on your specific circumstances.
It might be that recovering your company simply is not possible, which means closing is the only option. In this circumstance a Creditor’s Voluntary Liquidation (CVL) is the most common, which results in the closure of your company and the debts.
There are strict rules and procedures surrounding company administration and liquidation, so you should always contact the experts at Bridge Newland first if this is something you are considering.
Are you falling behind with your CVA contributions? Don’t delay, get in touch with Bridge Newland today
We offer cheap and affordable solutions to companies across the UK. If you want professional support from a fully-licensed Insolvency Practitioner, then contact Bridge Newland for free on: 0800 612 6197.