...procedure which enables a partnership business to make a proposal to its creditors for a plan to deal with its outstanding debts...
A Partnership Voluntary Arrangement (PVA) is a formal insolvency procedure which enables a partnership business to make a proposal to its creditors for a plan to deal with its outstanding debts in a way that gives a better result than liquidation would.
It is used where there is a viable, profitable business that has been unable to manage its cash flow by agreement with its creditors. If the PVA proposal is approved, the current debts are frozen and the plan is administered by the Supervisor of the PVA. The PVA is a legally binding contract between the business and its creditors and therefore it is a useful process where a minority of creditors would otherwise not go along with a rescue plan.
The PVA can also be an opportunity to bring in new capital, change the partners, introduce new skills, reduce overheads or to revise operational efficiency. The key to a successful CVA is to plan creatively and realistically through a collaborative approach. A PVA can also help avoidpersonal bankruptcy for the partners.