Options For Debt Consolidation
If there is one thing that is a big worry for business insurance customers it is getting into business debt.
In the current economic climate times are hard for businesses and if you are in debt it can seem like there is no way out. But there are options for debt consolidation that you can follow. The first step is to try and restructure your borrowing and consolidate it into reduced monthly payments but if doesn’t work you may have to try:
Company Voluntary Agreement (CVA)
A CVA is a lot like an Individual Voluntary Agreement (IVA) in personal insolvency law. Basically it is an agreement between a company and its creditors.
The main feature of this plan is that it is a voluntary arrangement, the company tasks for extra time to pay off the debt as well asking them to write off a proportion of the debt. The creditors may then accept the deal especially if they think that they will get more money back in the long run compared to the company going into liquidation.
While the CVA is arranged through an insolvency practitioner it is primarily a deal between the creditor and company.
The idea of the plan is that the business sets up an affordable monthly payment which can help reduce costs and increase cash flow. Therefore, the company can continue trading and ultimately reduce down their debt.
It is important to note that a CVA can’t be forced on creditors as it has to be agreed by at least 75 per cent by value.
However, if a CVA isn’t for you there are other options available.
Creditor Voluntary Liquidations (CVL)
This is simply the process of realizing assets and distributing it to the people who are legally entitled to them and in this way the company can be dissolved.
There are a variety of forms of liquidation; sometimes it can come through a court order which is generally made at the request of an unpaid creditor. However, if liquidation is voluntary it has been instigated by the passing of a resolution by the shareholders.
A CVL basically means that the directors cannot make the Statutory Declaration of Solvency necessary for a Member’s Voluntary Liquidation. This means that the company is insolvent and can no longer pay off its debtors.






