With so many debt recovery options being promoted on the open market, it can be difficult to see the wood for the trees and make an informed decision. A Company Voluntary Agreement may be the best option for you, and to explain a CVA more clearly here is a recent case study.

The company in this example was a 46 year old machinery sub contractors, which had experienced a management buy-out and were in the early stages of a volume manufacturing contract with a large automotive client.

As the contract looked to be very profitable, new expensive machinery was needed, which obviously meant a dip in cash, but with the outlook that the contract would more than pay for itself. However the levels of turnover initially projected were not reached and on top of this there were some issues with the machinery meaning parts of the engineering had to be sub contracted to an external company.

These unforeseen glitches lead to serious cash flow problems, and in turn a build up of debt to several secured and unsecured debtors: things seemed bleak for the future of this long running business.

After seeking the advice of a specialist debt advisor the company applied for a CVA which was approved by the creditors. Under the terms of the CVA preferential was fully paid and the unsecured creditors were paid at around fifty pence in each pound. The contract with the automotive business was passed to another company and the company returned to its bread and butter of sub contracting for a number of well established blue chips.

The CVA was called to an early conclusion after less than five years and jobs were saved, investments safe and the company continued to thrive.

Want to find out more about company voluntary agreements, then visit The Business Debt Advisor’s site for expert business debt help.