R3, the association of business recovery professionals, has produced a Standard Form Covid 19 CVA Proposal and accompanying Covid 19 Standard Conditions.
The Standard Form proposals are intended for use by SME companies, in each of the jurisdictions across UK that have been affected by Covid 19, to save time and cost and make CVAs more accessible to them.
CVAs - Company Voluntary Arrangements - are a rescue process governed by the Insolvency Act 1986. CVAs enable distressed companies to propose a way forward out of debt with the consent of their unsecured creditors. If 75% or more by value of creditors agree, the CVA generally binds the remaining creditors, even if they don't agree.
The Standard Form provides:
• the company with breathing space by preventing pre-CVA debts from being enforced whilst the CVA is in operation;
• delayed payment of 100% of the company’s debts; and
• for trading costs incurred during the CVA to be paid out of new trading income.
The terms of the Standard Forms can be amended or varied to suit the specific needs of the company in financial difficulty. This is another helpful tool with the restructuring tool kit to help businesses in financial distress as a result of Covid 19. Both Scots and English law forms are now available
If your company is considering whether or not a CVA is appropriate, or you need assistance with any other form of restructuring then our experts can help.