Key features of a CVA

The key features of CVAs are:

• They are a contract between you and your unsecured creditors.  Like any contract, there has to be a good measure of agreement, you cannot force your will on the creditors.  However, if you reach an agreement with creditors whose claims exceed 75% in value (of those voting), dissentient minority creditors are bound, provided they are not being singled out for different treatment or as the law says ‘unfairly prejudiced’.  Similarly, the creditors’ wishes cannot be forced upon you, but your negotiating position could be weak;
• Documents have to be prepared to be put in front of the creditors for consideration.  This (the ‘Proposal’) forms the basis of your agreement with the creditors.  It’s a major document in terms of both size and its effect on you and your business while the CVA is in place.  It’s well worth taking some time to prepare and understand it as it forms the basis of your agreement with your creditors.