Company Voluntary Arrangement – An Option to Liquidation

If you are one of the directors of an insolvent business company and you are in threat of being pursued by the liquidators for debt recovery in case of a pre-pack administration, then you can avoid the threat by avoiding the pre-pack administration. But what is the alternative to the pre-pack administration? The answer is the company voluntary arrangements. A company voluntary arrangement is the option that can save you from your personal liquidation. This kind of arrangement allows the company to renegotiate the terms of pay back of debts with the creditors of the company.

In most of the cases, a company voluntary arrangement proposes to pay off less than 50% of the debts of all the creditors. But, you would think that why is it so that the creditors would accept such a proposal that can only make them retrieve their 50% of owed money? It is because in the case of a complete liquidation of the company, the creditors would be in complete loss as far as the retrieval of debts is concerned. Another good thing about the company voluntary arrangements is that the company still remains in operation and can trade as before under the same board of directors.

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