It is not necessary for companies to inform their customers of their voluntary agreement of the company. It does not need to be disclosed in the company`s correspondence and is essentially a private matter between the company and its creditors. Dissenting creditors are therefore bound by a decision by the required majority. Once a creditor is bound by a CVA, he is prevented from taking action against the company that prohibits the terms of the CVA. As a general rule, these conditions are formulated in such a way that the creditor cannot collect debts falling within the scope of the CVA and not through the proposed mechanism. The CVA will begin as soon as the successful vote of the meeting of creditors has taken place. Your company will then make scheduled payments to creditors through the receiver as part of the agreement to repay the debt. The company is protected by the agreement which provides for all the planned payments. If the company is in arrears in a payment, it is likely that it will be settled by forced liquidation. Once the proposal is approved, all unsecured creditors are bound by the transaction. The company can continue to act as usual and the directors retain control. The CVA is supervised by a supervisor who must be a licensed receiver. The arrangement usually lasts 3-5 years.
CVA are proposed by the directors of a company. This contrasts with management or liquidation, which can also be proposed by a receiver. The nominee must send messages to any shareholder and creditor of the company whose claim and address are known, as well as the following documents: The costs related to setting up a CVA and the day-to-day management/management of the contract are significantly lower than the costs related to other insolvency proceedings, including judicial administration and liquidation. No cash package is required for the purchase of operating assets, as is the case for a pre-pack administration. A CVA can only be concluded under the direction of a licensed receiver, who acts as the nominee and supervisor for the trial. They will first formulate a payment proposal based on the company`s ability to repay and submit them to creditors who will vote whether or not to approve the terms offered. The proposal is reviewed and coordinated by the company`s creditors in an authorized procedure among others, including email, correspondence and virtual meetings. Therefore, the company should know well in advance if it will reach the necessary thresholds. However, a CVA cannot be approved by consent.
Once adopted, creditors are prevented from threatening the company or taking legal action against the company as long as the agreed terms are met. . . .