Partnership Voluntary Arrangement (PVA)
A PVA is a formal agreement between the debtor (Partnership) and with its creditors (similar to a CVA).
The business must be viable and the partners must be able to evidence that the business is viable before putting forward a PVA.
A PVA can overcome a business’s short term cash flow problems and enable its long term survival and/or allow the business to restructure and refinance avoiding a winding up of the business and personal insolvencies.
A PVA is effectively a compromise agreement between a partnership and its creditors. Creditors generally agree to write off a portion of their debt and receive payment over a set period of time.
In most cases the partnership makes monthly contribution payments into the PVA.
The Partners instruct an Insolvency Practitioner (IP) to act as Nominee. The IP prepares the proposal to creditors with the Partners assistance.
The proposal is issued to creditors and a meeting is called to enable creditors to consider and vote on the Partners proposal. In order for a PVA proposal to be approved, it must receive the support of more than 75% of creditors voting at the meeting.
Following the approval of a PVA proposal, the IP’s function changes from Nominee to Supervisor and their on going role is to ensure that the terms of the agreement are met by the Partners. The Supervisor reports to creditors and shareholders during the term of the PVA and distributes dividends.
Following the successful completion of a PVA, the Supervisor’s role is relinquished and the Partnership continues to trade as normal.
At Bailams, we aim to seek solutions that benefit the Partners and creditors securing a viable long term trading opportunity