Company voluntary arrangement Northern Ireland

SCC supports directors from the initial review through proposal preparation and, where approved, supervision of the arrangement. Our Recovery team examines debts, assets, cash flow, trading prospects and creditor relationships to establish whether the business has a credible route back to sustainable trading.

If a CVA appears appropriate, we help management prepare dependable financial information and develop a proposal based on contributions the company can realistically afford. We explain how creditor groups may be treated, identify matters that could affect approval and support communication with stakeholders. An insolvency practitioner acts as nominee during the proposal stage and usually becomes supervisor after approval. SCC combines this formal role with practical recovery planning, helping directors address both historic liabilities and the commercial causes of financial pressure.

SCC takes a wider view than simply assessing the company’s immediate debt position. Our Recovery team reviews trading performance, cash flow, creditor exposure and the operational changes that may be needed to support a sustainable proposal.

We also consider the interests of employees, customers, lenders and key suppliers, as maintaining confidence across these groups can be important while a recovery strategy is developed.

Where a CVA is appropriate, we help directors work towards a realistic plan designed to address the underlying financial pressures rather than provide only a short-term response. Directors receive clear, practical guidance focused on preserving stakeholder value, protecting viable areas of the company and maintaining the relationships and resources that may be important to its recovery.

SCC begins with an options review rather than assuming that a CVA is the right solution. We consider management accounts, creditor and debtor listings, tax liabilities, secured borrowing, contracts, employee costs, cash flow and expected future trading. The central question is whether the underlying business can become sustainably profitable while meeting ongoing costs and the proposed contributions.

Creditors also need a commercial reason to support the arrangement. The proposal should normally demonstrate a better expected outcome than an alternative such as liquidation. If forecasts are unrealistic, the business model is no longer viable or essential funding is unavailable, another route may be more appropriate. SCC explains the practical consequences, risks and likely timetable of each available option so directors can make an informed decision before creditor pressure reduces their choices.

The process begins with a confidential consultation and detailed financial review. If a CVA is considered viable, directors provide information about assets, liabilities, creditors, security, tax arrears, contracts, employees, recent accounts and future cash flow. SCC uses this information to help develop a proposal explaining the causes of distress, planned operational changes, expected creditor returns and how payments will be funded.

The nominee reviews the proposal and follows the required Northern Ireland procedure before creditors and members consider it. Creditor approval requires at least 75% by value of those voting. If approved, the arrangement binds creditors who had notice and were entitled to vote, subject to its terms and the applicable rules. The supervisor then monitors compliance, receives contributions and reports on progress while the directors continue managing the company.

A credible proposal requires evidence, transparency and realistic assumptions. SCC works with directors to explain what caused the company’s difficulties, which corrective steps have already been taken and how future performance will improve. We test projected sales, margins, overheads, working capital and payment capacity so the proposed contributions reflect achievable cash generation.

The document must also compare the anticipated CVA return with the likely alternative outcome. Creditors may consider expected recoveries, timing, business risks, management conduct and the company’s ability to comply. SCC helps present these matters clearly and responds to questions raised during the decision process. Creditors may request modifications, but any revised terms must remain workable for the company. Approval cannot be guaranteed, although a well-supported proposal provides a stronger basis for creditor confidence and informed voting.

A CVA commonly addresses unsecured company liabilities arising before the arrangement, including trade debts, certain tax arrears, rent and other contractual amounts. Treatment depends on the proposal, the priority of each claim and Northern Ireland insolvency law. Secured and preferential creditor rights cannot normally be changed without their consent.

SCC reviews the full creditor position, including security, guarantees, leases, finance agreements, employee liabilities, retention of title claims and connected-party balances. HMRC debts require careful analysis because their priority can differ according to the type of tax involved. A CVA deals with company liabilities and does not automatically release directors from separate personal obligations. Personal guarantees, overdrawn directors’ loan accounts and possible claims therefore require individual consideration. The final proposal should clearly identify included debts, excluded liabilities and any amounts that need separate arrangements.

A CVA may allow a viable company to continue trading while repaying agreed liabilities over time. Directors usually retain day-to-day control, which can help preserve employment, customer relationships, goodwill and business value. Creditors may also receive a better return than they would through liquidation, particularly where ongoing trading generates additional funds.

There are important risks. The proposal must obtain sufficient creditor support, and the company must then meet every payment and condition. New tax, payroll, rent and supplier liabilities must be paid as they arise. The process may affect credit facilities, supplier terms and stakeholder confidence. Protection from creditor action is not always automatic before approval, and any moratorium must be considered separately. If the company defaults and the arrangement fails, creditors may resume enforcement and the business could enter liquidation or another formal insolvency process.

After approval, the arrangement operates according to its agreed terms. The supervisor receives contributions, distributes funds and monitors compliance. Directors continue managing the company but must provide financial information, meet reporting requirements and tell the supervisor about significant changes that could affect performance.

SCC works with management to maintain accurate cash flow reporting and identify problems early. The company must pay liabilities arising after approval while also making its CVA contributions. The terms may provide for performance reviews, increased contributions, asset realisations or possible variations where circumstances change. Required progress reports are issued during the arrangement. Once every obligation has been completed, the supervisor reports completion and the company is released from the relevant included liabilities in accordance with the proposal. If payments fall behind, early communication is essential because persistent default may lead to termination and renewed creditor action.