Business Advice
When is CVA superior to pre-pack administration?
When companies are looking for ways to deal with business bankruptcy, two methods have been established as the best. The first method is pre-pack administration, which allows the company directors to buy back the company without its debts. This method has been gaining a lot of popularity with the hard economic time, which has pushed many companies to the brink of business bankruptcy. However, this method is not always successful. In such cases company voluntary agreement is used. With this method, the directors form an agreement with the creditors to pay a part of the debt and have the rest written off. The use of CVA is necessary when the company directors have borrowed from the company and therefore liquidating it would make them liable. With a CVA arrangement they can pay back over an extended period. CVA can also be used instead of pre-pack administration when the directors do not want to wind up the company. Finally, a CVA arrangement does not require the company directors to raise capital to buy back the company assets.