Do creditors remain bound by the CVA if the company fails to meet the agreement terms?
Like any other type of agreement, there are two sides to the CVA or Company Voluntary Agreement—the company and the creditor. For a CVA to push through in the first place, a proposal should be submitted to creditors and shareholders. Once approved, the company enters into a CVA and is bound by its terms to make the required monthly payments. Monthly repayments are directed to the company’s insolvency practitioner to be then distributed to the company’s creditors. If a company fails to comply with the monthly payments, it should discuss matters with its insolvency practitioner and determine the possibility of other insolvency options.
What can creditors do? For starters, they should revisit the agreement and check which terms of the CVA deal with a company’s non-compliance—which constitutes a breach of contract. In this case, creditors are no longer bound by the CVA, and they can also look into other solutions to pursue the debtor company and obtain the remaining amount owed.
Like the companies navigating their debt situation, creditors can also get expert help from insolvency practitioners in Glasgow to recover the debt owed by insolvent companies and individuals. Visit https://www.middlebrooksadvice.com/about-middlebrooks/insolvency-practitioners-glasgow/ to get started.