A voluntary arrangement is an alternative to other insolvency processes such as liquidation, administration or bankruptcy and will usually provide the prospect of a better return to creditors.
They can be for companies, individuals and partnerships – company voluntary arrangements (“CVA”), individual voluntary arrangements (“IVA”) and partnership voluntary arrangements (“PVA”). The same principles apply to all voluntary arrangements.
If there is a viable business or employment but old debts have built up to a level where they are out of control, a voluntary arrangement may be the answer. A voluntary arrangement is legally binding on creditors and is essentially a compromise agreement where all parties achieve a better outcome than could be achieved through other alternatives.
The terms of a voluntary arrangement can be very flexible but will need to show benefit for creditors and you. Creditors will reasonably expect their prospects of recovery to be better than would be likely from liquidation, administration or bankruptcy. You would normally benefit by retaining assets in your personal capacity or company which would be lost in other procedures
Brailey Hicks will assist you with the preparation of the voluntary arrangement proposal and advise on the type of offer which is likely to be acceptable to creditors. A voluntary arrangement proposal is voted on by your creditors and will require support from 75% of creditors by value. Creditors can put forward modifications to the proposal but they cannot impose them on you and you can decide whether or not to accept them.
If you are considering a voluntary arrangement it is essential you take professional advice and all the options are explained to you before you sign up. Even when voluntary arrangement is viable for creditors, it may not be the best option for you.
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