A CVA is only an appropriate course of action for companies in particular situations. It may be the best course of action for your business if you have surplus assets available or trading profits that can be offered to your creditors. A general rule of thumb is that a CVA should offer creditors a better alternative to what would be the case should the company be forced to enter into another insolvency procedure such as liquidation.
Generally, a CVA is proposed by the company’s directors, however the procedure can also be used as an exit route from Administration by a company’s Administrator.
Only a licensed insolvency practitioner can oversee the CVA process, firstly being appointed as what is called the Nominee and then, following approval, the CVA Supervisor.