Options for the Company



Sell non-essential assets or alter company structure to return to profitability. Close divisions, make redundant, manage cashflow or sell part/all of business . Sale of business.



  • Maintain existing trading activities
  • Preserve relationships with employees, suppliers and other interested parties
  • Retain control of company
  • Must be foreseeable future for company
  • Difficult to do correctly

Informal arrangement

Negotiate with creditors individually to achieve a settlement of the entire debt, reduce interest payments or extend terms of agreement



  • Cheap to achieve
  • Can reduce pressure if agreement reached
  • Not legally binding
  • Not all creditors may agree
  • May impact ability to trade with essential suppliers

Company voluntary arrangement (CVA)

Formal agreement with all creditors to agree settlement of debts at a rate usually less than 100%




  • All creditors bound
  • No come back from creditors as long as agreement is maintained
  • Agreement is completely flexible
  • Costs of CVA and payments to creditors can be drawn from contributions
  • All creditor action frozen
  • Retain control of company
  • Needs 75% in value of creditors to agree
  • Only those creditors who have received notice are bound by terms
  • Can be costly to achieve
  • Could last up to 5 years


Court process to instruct insolvency practitioner to take control of company and realise assets, from selling business to forced sale


Advantages Disadvantages
  • Ability to continue trading so as to maximise realisations
  • Business may be sold and employees’ jobs saved
  • More costly than liquidation
  • Lose control of company
  • Investigation into conduct of directors


Normally closure of company and forced sale of all assets.  Appointment of insolvency practitioner to take control of company.
  Advantages Disadvantage
  • Closure of financial problems
  • Lose control of company
  • Termination of business
  • Employee redundancies
  • Investigation into conduct of directors
© 2021 RJC. All rights reserved. Site by Graphite Design