A Fast-track Voluntary Arrangement (FVTA) can be a lifesaver for businesses in financial distress. This type of arrangement allows a company to restructure its debts and avoid liquidation.
The FVTA is a relatively new concept, introduced by the UK government in 2020 to provide a quicker and more flexible alternative to traditional insolvency procedures. It's designed to help businesses recover and continue trading.
To be eligible for an FVTA, a company must meet specific criteria, including being insolvent or at risk of insolvency. This means the company must be unable to pay its debts as they fall due, or have a high risk of becoming insolvent in the near future.
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What Are Fast-Track Voluntary Arrangements?
Fast-track voluntary arrangements are a type of legally binding agreement between a company and its creditors.
This arrangement allows a business to pay back its debts in manageable monthly payments over a set period, removing the immediate danger of bankruptcy and providing breathing space for the company to restructure.
In order to be eligible for a fast-track voluntary arrangement, you must either have already been declared bankrupt or be going through formal bankruptcy proceedings.
You'll need to send a formal letter of application to the courts and your lenders, and they will decide upon whether or not to accept your application.
If your application is accepted, your lenders will be bound to the terms of your agreement for the rest of the arrangement's period.
The Official Receiver will act as a correspondent between you and the courts, overseeing the setting up process.
You can find more information about fast-track voluntary arrangements on the Insolvency Service's online leaflet at www.bis.gov.uk.
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Benefits of Fast-Track Voluntary Arrangements
Fast-track voluntary arrangements are a cost-effective solution for struggling businesses, with an average IP fee of £2,000 – £5,000.
They allow you to retain sovereignty over your possessions, including your house and other valuable assets, which is a major benefit.
FTVAs can be set up quickly, taking approximately four weeks to prepare the proposal, which means you can continue trading with minimal disruption.
In fact, the swift assessment and implementation process allows the company to quickly begin repaying creditors and moving towards a profitable future.
A fast-track voluntary arrangement is often the last viable option before declaring bankruptcy, but it's worth considering the benefits, including the ability to repay creditors over a longer period.
This can be a more appealing option for creditors, as they're assured of regular repayments once the arrangement has been agreed.
FTVAs are designed for certain companies and situations, and it's essential to meet the criteria before pursuing this option.
By working with an experienced licensed insolvency practitioner, you can negotiate with creditors and devise a repayment plan that works for everyone involved.
In fact, the insolvency practitioner will devise a repayment plan that restructures company expenditure, taking into consideration how much you can realistically repay per month.
The payment plan will consist of making one monthly instalment to a trust account overseen by your licensed insolvency practitioner, which can help rebuild relationships with creditors.
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How to Get a Fast-Track Voluntary Arrangement
Getting a fast-track voluntary arrangement is a relatively quick process, taking approximately four weeks to prepare the proposal. This allows your business to continue trading with minimal disruption.
To be eligible, your company's affairs must be less complex, making it suitable for small to medium-sized businesses. The insolvency practitioner will assess the situation and devise a plan for repayment and restructuring.
The cost of a FTVA varies, but on average, the IP fee is around £2,000 – £5,000. This is a manageable cost, especially considering the potential outcome of not having a FTVA.
You'll need to meet certain criteria, which includes having a limited company with no other means of survival. If your company's success is short-lived without immediate support, a FTVA might be a good option.
The FTVA process involves devising a repayment plan, which restructures company expenditure and takes into consideration how much you can realistically repay per month. This plan will be overseen by a licensed insolvency practitioner.
Understanding Fast-Track Voluntary Arrangements
Fast-Track Voluntary Arrangements (FTVAs) are a type of arrangement that can help a struggling business get back on track.
FTVAs are typically suitable for small to medium-sized companies with less complex affairs. This means the insolvency practitioner (IP) can quickly assess the situation and devise a plan for repayment and restructuring.
In as little as four weeks, the IP can prepare the FTVA proposal, allowing the company to continue trading with minimal disruption.
The cost of an FTVA is relatively low, with an average IP fee of £2,000 to £5,000. This is a manageable expense for a business in a difficult time.
An FTVA is designed for companies that need immediate support to survive. It's a good option for businesses that are likely to succeed if given a short-term reprieve.
The FTVA process involves consolidating revised payments into a single monthly instalment, making it easier for the company to manage its finances.
If the company fails to comply with the arrangement, legal action will resume.
Fast-Track Voluntary Arrangement Process
A fast-track voluntary arrangement can be set up in approximately four weeks, allowing your business to continue trading with minimal disruption.
The insolvency practitioner will assess your situation and devise a plan for repayment and restructuring.
The cost of a FTVA varies, but on average, the IP fee is around £2,000 – £5,000.
The administration process is reasonably easy, keeping costs to a manageable level at a difficult time.
The actual agreement term of a Fast Track CVA will last between three and five years.
Once the Fast Track CVA is agreed upon, the insolvency practitioner will devise a repayment plan that restructures company expenditure.
The payment plan will consist of making one monthly instalment to a trust account overseen by the licensed insolvency practitioner.
All legal action against the company will halt once you enter a Company Voluntary Arrangement.
However, if you fail to comply with the arrangement, the legal action will resume.
Fast-Track Arrangement
A Fast-Track Arrangement is a quick solution for small to medium companies with less complex affairs.
The process typically takes around four weeks to prepare the proposal, allowing the company to continue trading with minimal disruption.
This swift assessment and implementation process enables the business to quickly repay creditors and start moving towards a profitable future.
The cost of a Fast-Track Arrangement varies, but the average insolvency practitioner fee is around £2,000 – £5,000.
This cost-effective solution helps keep costs manageable during a difficult time, allowing the company to focus on recovery.
The arrangement can be administered relatively easily, with minimal long-term input from the insolvency practitioner.
In contrast, without a Fast-Track Arrangement, the company may be forced to satisfy creditors immediately, leading to administration and potentially less money for creditors.
A Fast-Track Arrangement can be a supercharged CVA procedure, conducted in as little as six weeks, making it a viable option for companies in need of immediate support.
The agreement term will last between three and five years, giving the company time to recover and become profitable again.
Once the arrangement is agreed upon, the insolvency practitioner will devise a repayment plan that restructures company expenditure and ensures the company can realistically repay creditors.
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The payment plan will consist of making one monthly instalment to a trust account overseen by the licensed insolvency practitioner.
This arrangement can provide a lifeline for businesses trapped by creditor pressure, allowing them to repair their financial position and negotiate a payment compromise with creditors.
By seeking a Fast-Track Arrangement, companies can soften the stance of creditors and potentially avoid liquidation.
Related reading: Companies' Creditors Arrangement Act
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