| A CVA is a deal between the company and its creditors; unsecured, trade and tax, to repay them from future profits. Alternatively, a deal may be written to sell assets and pay back creditors from the proceeds.
The deal is based on preserving the company, rebuilding sales and profits and paying something back over an agreed period of time. Directors remain in control, personal guarantees don’t get called in (usually) and it gives the business a fighting chance to survive.
We start every CVA deal with a blank sheet of paper and a clear mind. Every case is different but there are some crucial points to consider before embarking down this path.
Vital Components of a successful CVA are
- A viable business that can return to profitability.
- A commercially structured deal – i.e. do not pay too much too soon.
- Introduction of appropriate levels of working capital in addition to the restructuring of debt.
- The management accepts that there has to be change in the management and company.
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