How does a CVA affect the employees and directors of a business?

As a condition of a CVA being agreed there will no doubt be a demand that costs are reduced.  This can mean closing down of warehouses, shops etc with the loss of staff.  However, as mentioned before, the main purpose of a CVA is to AVOID terminal insolvency where there will be more job losses and the returns to creditors will be even less.  Management can often be blamed for problems in the company and a company in a CVA will often need changes at board level.  Often a Non executive director can be brought in with experience of turning around firms to lend expertise and help the directors survive the rigours of the CVA.  During a CVA it is often agreed that the directors do not take any pay rises and of course may take pay cuts.

For more information on employee issues you can refer to our help for employees page

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