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Formal Rehabilitation Procedures and Insolvent Firms: Empirical Evidence on the British Company Voluntary Arrangement Procedure

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  • Cook, Gary A S
  • Pandit, Naresh R
  • Milman, David

Abstract

The British Company Voluntary Arrangement (CVA) is a relatively new debtor rehabilitation process intended to help financially troubled companies, particularly SMEs, resolve their difficulties without being forced into liquidation by secured creditors anxious to recover their funds. This paper is based on a survey conducted by Milman and Chittenden for the Association of Chartered Certified Accountants that is the largest and most comprehensive on the subject of British CVAs. It has three principal objectives: (i) to outline the defining characteristics of CVAs; (ii) to analyse the relationships between CVA performance and contextual factors; (iii) to provide policy recommendations based on those findings. Among other things we find that CVA success is most closely associated with sound fundamental prospects for recovery and supportive creditors. Our principal recommendation is that ways should be found of lowering the fixed costs of CVAs to make the procedure feasible for a larger number of small firms. Copyright 2001 by Kluwer Academic Publishers

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  • Cook, Gary A S & Pandit, Naresh R & Milman, David, 2001. "Formal Rehabilitation Procedures and Insolvent Firms: Empirical Evidence on the British Company Voluntary Arrangement Procedure," Small Business Economics, Springer, vol. 17(4), pages 255-271, December.
    • Handle: RePEc:kap:sbusec:v:17:y:2001:i:4:p:255-71
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    Cited by:

    1. Julian Oliver Dörr & Georg Licht & Simona Murmann, 2022. "Small firms and the COVID-19 insolvency gap," Small Business Economics, Springer, vol. 58(2), pages 887-917, February.
    2. Manuel Rico & Naresh R. Pandit & Francisco Puig, 2021. "SME insolvency, bankruptcy, and survival: an examination of retrenchment strategies," Small Business Economics, Springer, vol. 57(1), pages 111-126, June.

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