When would my company consider using a Company Voluntary Arrangement with a Moratorium?
A CVA without a Moratorium does not freeze creditors actions in the period of 3 - 4 weeks up to the creditors meeting
A Company Voluntary Arrangement, without a moratorium is used if your business is not subject to an imminent threat (in the relatively short period leading up to the Company Voluntary Arrangement creditors meeting [CVA]) such as:
- a winding up petition
- or the threat of receivership
- or the threat of distraint
- or a walking possession arrangement
- or repossession of goods by a financial company
- or landlords distraint
If there are no threats of creditor action then it is possible that a Company Voluntary Arrangement (CVA) without a moratorium may be sufficient to achieve the rescue of your company as the extra protection of a freeze on creditors actions in the short period leading up to the creditors meeting is not needed.
Directors who want "safety first" may, however, wish to apply for a moratorium in any event to obtain the absolute protection of a freeze on creditors actions in the short period leading up to the creditors meeting. Alternatively your company could be placed in administration to achieve the same objective.