Fast-Track CVAs: How to Fast-Track Voluntary Arrangements

Economic and political upheaval is creating major difficulties for many companies. Supply chain issues, cashflow problems, changing regulations and continued uncertainty are leading to financial troubles for many businesses – often despite their best efforts. However, there is a solution for struggling companies which is effective for many. What is a fast track company voluntary arrangement?  A fast-track voluntary arrangement provides the means for a business to restructure its operation. This allows the company to repay creditors whilst continuing to trade. At the same time, it lays the groundwork for recovery, growth and profitability.    

What Are Fast-Track Voluntary Arrangements (FTVAs)?

A fast-track voluntary arrangement is a legally binding agreement between a company and its creditors. It allows a business to pay back its debts in manageable monthly payments over a set period. This removes the immediate danger of bankruptcy and provides breathing space for the company to restructure, as well as satisfy creditors.

What Are the Benefits of FTVAs?

An FTVA provides several crucial benefits:

1. Repayment to creditors is spread over a number of months or even years.

2. Manageable repayments improve cashflow and help ensure the company’s survival.

3. Creditors will receive regular monthly repayments.

4. This helps reduce the possibility of bankruptcy, which would likely leave creditors with very little.

5. A legally binding agreement eases pressure from HMRC and creditors.

6. Company directors can continue to run the business and work on effective restructuring.

7. In effect, money from future income can be used to pay existing debts.

8. FTVAs only require a single monthly payment, so the process is centralised and easy to manage.

Fast-Track Voluntary Arrangements Are Quick to Set Up

FTVAs tend to be a good solution for small to medium companies whose affairs are less complex than larger ones. For smaller businesses, the insolvency practitioner (IP) won’t need too long to assess the situation and devise a plan for repayment and restructuring. Indeed, once an IP has been appointed to oversee the process it takes approximately four weeks to prepare the FTVA proposal.

The swift assessment and implementation process allows the company to continue trading with as little disruption as possible. The business can quickly begin to repay creditors and start moving towards a profitable future.

Fast-Track Voluntary Arrangements Are Cost-Effective

FTVAs are a cost-effective solution for a struggling business. Once the FTVA is in place, it is reasonably easy to administer. It won’t require long-term input from the insolvency practitioner before the company starts to see positive results. This helps keep costs to a manageable level at a difficult time.

The cost of a FTVA varies according to the nature of the business and the complexity of the situation. However, on average the IP fee is around £2,000 – £5,000.

Without a fast-track voluntary arrangement, the company could be forced to satisfy creditors immediately – a situation likely to end in administration and less money for creditors as well.

FTAs Are Good for Creditors and Your Business

A quick and efficient assessment process is an excellent way to rebuild relationships with creditors. When overseen by an experienced licensed insolvency practitioner the negotiations between company and creditors shouldn’t be overly complex or extensive.

Creditors can be assured of regular repayments once the arrangement has been agreed – an ideal incentive for their full cooperation.

Is a Fast-Track Voluntary Arrangement Suitable for Your Company?

An FTVA is designed for certain companies and situations. The following criteria must be met:

1. You must be a limited company registered under the Companies Act 2006.

2. You must be insolvent or about to become insolvent.

3. Meaning you can’t pay your debts now or you soon won’t be able to.

4. Company directors must prove the business is viable in the future.

5. So, with restructuring and careful management, they are confident of future growth.

6. Cashflow forecasts must prove the agreed repayments to creditors can be met and maintained throughout the repayment period.

7. Creditors must be satisfied with the repayment schedule – they must accept the amounts proposed and be confident the company has the potential to recover.

8. At least 75% of creditors (by value of debt) must agree to the fast-track voluntary arrangement.

The Road to Recovery with Irwin Insolvency

With a fast-track voluntary arrangement, you can repay your creditors and set up your company for future success.

Our expert insolvency practitioners will guide you through the whole process.

Contact Irwin Insolvency today to arrange a fast-track company voluntary arrangement for your business.