Company Voluntary Arrangement For Law Firms

If your law practice has cashflow problems and pressure is growing, it’s time to get support and advice on your options. Its free to get initial advice from experts in turnaround and insolvency such as KSA Group who own this website. We have been rescuing, restructuring and closing law firms since 2003. Talking to experts (free) helps you understand this option and you will find it takes a lot of weight off your mind.

So how would a CVA help your law practice?

A CVA is a legally binding agreement with your LLP’s or company’s creditors which allows a proportion of its HMRC and unsecured debts to be paid back over time. A well-structured proposal will ensure that HMRC, banks and other creditors support a restructure of the debts, the costs and the practice. By involving the regulators early, we can ensure they have input and oversight of client file issues and client account issues.

Once the proposal has been approved then all unsecured creditors, are bound by the arrangement. The company or LLP can carry on trading as usual, and the directors remain in control. The CVA is monitored by a supervisor, who must be a licensed insolvency practitioner. The arrangement usually lasts for 3-5 years.

A CVA is the best UK rescue tool for a company/LLP that could be viable going forward but is burdened by historic debt. The directors or designated members, who remain in control, are able to trade out of their firm’s current financial problems, provided that they have addressed the problems that caused the debts in the first place.

This page will help you to discover what a company voluntary arrangement does, understand how it works and how it can help you stop creditor pressure and turnaround your company.

If your law firm cashflow is under severe pressure call now. We will help you with the SRA and rescue your business.

Call our support centre on 0800 970 0539 for a no obligation confidential chat. Read on to see the benefits of a Company Voluntary Arrangement, and how it can help you.

The Advantages of a CVA For Your Law Firm

1. Company voluntary arrangements can improve cash flow quickly.
2. SRA will support well structured professional CVA proposals and allow you to continue to practice.
3. Stop pressure from HMRC tax, VAT and PAYE while the company voluntary arrangement is being prepared. We deal with HMRC on your behalf.
4. A CVA can stop the threat of a winding up petition from HMRC
5. Costs of overheads, people and buildings can be rapidly cut in a CVA as expensive managers can be made redundant.
6. Company voluntary arrangements can terminate employment, payment/compliance obligations under leases, onerous supply contracts and all with NIL CASH COST
7. All money owed to creditors is bundled up in one monthly payment to the supervisor
8. Remove employees with no redundancy payments of lieu of notice costs (paid by the Government).
9. Board and shareholders or designated member remain in control of the firm.
10. A CVA has much lower costs than administration or a Scheme of Arrangement
11. It is not publicly announced like administration is.
12. Informed client consent is not necessary.
13. You do not have to say your law firm is in a Company Voluntary Arrangement to your customers

Disadvantages of a CVA for a law firm

1. The firm will have no credit rating after the CVA unless a group structure is out in place.
2. The firm may have to find new bank facilities.
3. SRA will want regular reporting of the progress to entering CVA and beyond.
4. PII may be more expensive.

CVA is a much more palatable solution than SRA intervention. Administration or pre pack administration, BUT it is tough process to go through. YOU need to be prepared to change the business practices to focus on profitability to ensure the CVA will perform over time. Creative corporate structure planning will be part of the advice we will give your firm.

We practice as a partnership?

Please note that if your firm is an ordinary partnership most of the above applies, but it is likely a partnership voluntary arrangement would be the process we would advise you upon.

However, in advance of any meeting and issuance of engagement  letters our regulators and the Insolvency Service (part of HM Department of Business Energy and Industrial Strategy) require all insolvency practitioners to obtain know your client (KYC) and anti-money laundering (AML) identification documents for all directors and shareholders holding >25% of the shares to allow us to proceed to advise the company. We will require up to date ID information including a photographic ID, such as a passport or driving licence PLUS a home utility bill or bank statement for each person.