Company Voluntary Arrangement Rejection
Company Voluntary Arrangement (CVA) rejection is usually by aggrieved creditors not generally wishing the company to trade on.
For a Company Voluntary Arrangement (CVA) to be approved and not rejected, it must have the support of 75% of its creditors (by value). The proposal requires approval of 50% of its shareholders.
However, a CVA once agreed and coupled with approval becomes legally binding.
Wherefore the company’s creditors do not accept the terms offered; the directors have little option than to find a different route, out of trouble.
Creditors Review Process
An Insolvency Practitioner drafts a company voluntary arrangement. Once the company directors are willing, submit the CVA to the court, along with a copy sent to each of the company’s creditors.
However, the company’s Shareholders and Creditors must accept the CVA before it becomes a legally binding agreement.
To begin with, hold a shareholders’ meeting. Fifty per cent of the shareholders (value) need to vote yes, to therefore approve the document.
Once shareholders have agreed on the terms of the “CVA”, then a meeting of creditors needs holding. However, 75 per ce