www.company-debt.co.uk

[EddieP]

How can we collect an outstanding debt which is owed to our business if the company in question has gone into a CVA? Our cash flow is being put under considerable pressure and we need to collect in everything we can.

[Derek Cooper]

Hello EddieP and welcome

Unfortunately if a company voluntary arrangement (CVA) has been accepted by the majority of the company's creditors then it is legally binding on all and you can no longer collect your debt directly. This means that you are likely to have to write of a significant part of what you are owed by this creditor I am afraid.

[EddieP]

This does not seem very fair Derek, particularly as we voted against the CVA in the first place. If we have to write off the debt, it will cause us serious financial difficulties.

[Steven Jackson]

Hi there EddieP

Even if you voted against the CVA, it can still be legally imposed if the majority of the company's creditors by value vote for it. This is more than likely what has happened in this case and as such, you have to obide by its terms. You will not be allowed to try and collect what you are owed directly from your customer.

It is not unusual for creditors to be placed in financial difficulty themselves as a result of one of their clients using a debt management solution such as a CVA. Where this happens, you will need to restructure the business or worst case consider a debt management solution yourselves.

[Graham Wilson]

Hello EddieP

Sorry to hear about your situation. When a business goes into a CVA or does pre pack administration, the outstanding creditors will often get returned far less than they are owed. Unfortunately there is nothing you can do about this.

It is perhaps worth saying that with the CVA at least you have a chance of some return. The company was obviously insolvent or a CVA would not have been possible. As such, perhaps better this than the company closing and you getting even less back.