For small business owners faced with mounting financial problems there are a number of business debt relief options open to them.
Company Voluntary Arrangements (CVA)
One commonly used solution to debt used by businesses in the UK is Company Voluntary Arrangements (CVA). Similar to an IVA a company voluntary arrangement is a legally binding agreement made between a company and 債務重組 its creditors. In the CVA the business agrees to pay what it owes to its creditors over a fixed period of time, usually five years. The main benefit of the CVA is that it allows the business to continue to trade whilst at the same time reducing debt repayments to something more manageable. Company owners are still able to run the business as they wish. Additionally once the CVA is agreed creditors are prevented from taking any other legal action to recover the debt.
Creditors Voluntary Liquidation (CVL)
If a company is insolvent and cannot pay all of its debts, sometimes the only appropriate course of action is to enter into company liquidation. A Creditors Voluntary Liquidation (CVL) is the most common way for directors to deal with these problems. A CVL can be used when a company is insolvent, when financial restructure isn’t a viable option or in cases where company directors don’t feel that they have the determination needed to rescue the business.
Administration orders are used to protect a small business from its creditors while its owners, management and appointed insolvency practitioners determine the best course of action. The main benefit is that a company in administration can continue to trade while either a debt restructure package is formulated or the decision is made to wind the company up. An Administration Order can be sought by the company, its Directors or one of the creditors.