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VVA’s Viable Voluntary Arrangements

A common scenario for us is a conversation that runs along the lines of “We’ve got a viable business but we just can’t keep on top of our debt repayments”

Voluntary Arrangements come in many shapes and sizes, and can be put in place for individuals (IVAs), partnerships (PVAs), LLPs or limited companies (CVAs).  One of the key benefits of a voluntary arrangement is that it can enable a person or business to avoid bankruptcy or liquidation and continue to trade, whilst perhaps paying funds to creditors over a number of years.

Rather than look in detail at the ins and outs of how voluntary arrangements work, we thought it may be useful to give some practical examples of how we have utilised voluntary arrangements to help local businesses to continue to trade.  Whilst everyone would rather avoid being in a position to need assistance, trading on using a voluntary arrangement is more often than not a good deal for creditors as well as keeping businesses trading and generating an income, and keeping staff employed.

Pubs / Restaurants – This market is tough at the moment.  We have had many examples where we have been able to utilise a voluntary arrangement to allow the owner an extended time to sell a property, and giving some relief from the immediate pressure of creditors.

Asset rich, cash poor – The old adage about cash being king is as relevant now as it ever was.  We have had numerous businesses come to us that have significant assets (haulage wagons, investment property, agricultural land, plant and equipment) but very few  liquid assets for working capital.  We’ve used voluntary arrangements to give protection and allow the business or individual to sell assets, realise equity, and repay creditors over extended periods of time.

Business needs a fresh start – In many cases cashflow difficulties prompt an honest review of the business, and provide a good time to assess staffing levels, look at overheads, contribution rates, bad debts etc.  If a business has a good ‘core’ business then a VA can be a mechanism to allow the owners to focus on moving it forward without being dragged down by  creditor pressure.

As mentioned before there is no magical “one size fits all” for voluntary arrangements, but if you would like to know anything more about the procedure, or whether it is relevant   for any of your clients or contacts please call Jackie Kirsopp or Carol Tindal at Dodd Rescue.

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