CVA vs Pre-pack

Is your business is in a turnaround finance situation? If it is you will have with few stark finance choices. These are Company Voluntary Arrangement or a Pre-pack, of which case the most obvious one is to put the company into liquidation and just walk away. If there is a means of raising funds a Pre-pack becomes a possibility. This enables you to repurchase the important parts of the business from the liquidator and start again.

The main disadvantages of a Pre-pack are to any unsecured Creditors as they will usually lose out. The exception is if the liquidated business has substantial assets that are worth saving. If they are available, and at what is effectively a discounted price, you can set up a new, debt-free business at a relatively low cost.

The down side is that there are likely to be some very unhappy creditors?

Having said this,there may be one other solution. This is to apply for a Company Voluntary Arrangement (CVA)

What is a Company Voluntary Arrangement (CVA)

A Company Voluntary Arrangement (CVA) is a legally binding arrangement between a company and its creditors to repay them over a period of time.

Key Benefits

  • Enables the company to continue in business with a view to improving the position of the creditors
  • Stops court action and winding up procedures
  • Eases cash flow pressures
  • Directors can remain
  • Greater flexibility allows the return to creditors to be maximised.

Turnaround Finance

If you think that your company actually has a viable future, except thatyou know that there are cash flow problems, a CVA may be the solution. BFS can offer this option to distressed businesses through our close connections with IPs.

For more details on Company Voluntary Arrangements and how we can help, please call us on 0800 093 5240 for a FREE, no-strings consultation, or e-mail us at enquiries@bufinserv.co.uk 

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Recovery Loan Scheme