In Voluntary Agreement Definition

An Individual Voluntary Agreement (IVA) is a formal, legally binding agreement between you and your creditors to repay your debts over a specified period of time. This means that it is approved by the court and your creditors must comply with it. Under UK insolvency law, a bankrupt company can enter into a voluntary enterprise agreement (CVA). The CVA is a form of composition similar to the personal IVA (individual voluntary agreement) in which insolvency proceedings allow a company facing debt problems or insolvent companies to enter into a voluntary agreement with its commercial creditors for the repayment of all or part of its corporate debt over an agreed period. [Citation required] The application for a CVA may be submitted by the agreement of all the directors of the company, the legal directors of the company or the appointed liquidator. [1] A bankrupt debtor is normally dismissed after one year or less automatically if the debtor is entitled to early discharge. An income agreement or bankruptcy order (if one is enforced, depending on the person`s disposable income) lasts no more than three years and payments are usually much lower than in the case of an income-based IVA. Directors have a legal obligation to act properly and responsibly and to put the interests of their creditors first. The risks associated with the liquidation of a company may include the exclusion from the activity of director of other companies as well as the personal reputation of director. In extreme cases, managers may be held personally liable for contributing to creditors` defaults. However, since a voluntary agreement by the company is in the best interests of creditors, there is no investigation into the director`s conduct. If three-quarters of the votes disagree with the CVA, your company could face a voluntary liquidation. In this process, a debtor who has enough money based on priority creditors and essential expenses can enter into an individual voluntary agreement.

[1] (After independent consultation, debtors with less serious problems could consider a debt management plan.) The analogous procedure for companies is the voluntary company agreement. A voluntary agreement of a company can only be implemented by a receiver who prepares a proposal to the creditors. A meeting of creditors is held to verify whether the CVA is accepted. As long as 75% (in debt value) of the voting creditors agree, the CVA is accepted. All creditors of the company are then subject to the conditions of the proposal, whether or not they have voted. Creditors are also unable to take further legal action as long as the conditions are met and existing legal actions, such as a liquidation order, are closed. [2] To transfer a company into a voluntary agreement (CVA) of the company, it is necessary to follow a particular process to assess the profitability of the agreement and set up this commercial recovery process. . . .