Best Partnership Voluntary Arrangement Companies

Partnership Voluntary Arrangements (“PVA’s”) is designed similar to the limited company debt solution known as Company Voluntary Arrangement (CVA).

PVA business debt solutions are governed by the Insolvent Partnerships Order 1994. 

A Partnership Voluntary Arrangement can be a useful debt solution to help assist partnerships back to profitable businesses. A PVA is an agreement with unsecured creditors to repay a proportion of business debts.

In this Partnership Voluntary Arrangements guide, you will learn everything involved in helping a partnership business survive.

Is a PVA The Right Solution?

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Best PVA Companies 2024

There are many top-rated PVA companies in the UK to choose from.

From our research, here is a list of the best Partnership Voluntary Arrangement companies in April 2024:

  1. Business Insolvency Company
  2. Debtline
  3. GW Financial Solutions UK Ltd
  4. Business Debt Help 
  5. Trust Debt Advice
  6. NTF Financial Solutions Insolvency
  7. Payplan
  8. National Debt Advice
  9. Stepchange

What is a Partnership Voluntary Arrangement?

Essentially, an partnership voluntary arrangement, or PVA, is an agreement that helps struggling directors or business partnerships repay a portion of the debts, while still allowing them to continue trading despite their money troubles.

A PVA is common with companies who are facing insolvency or cash flow problems and cannot afford their repayments to their current creditor.

It can help build a company back to profitability as it allows a partnership to repay its debts over time, rather than the full amount upfront.

While the PVA is being paid off, the partnership can keep control of their business without the threat of entering liquidation.

Keep reading to find out the benefits of a PVA and how it might be the best option for your partnership.

How Does a Partnership Voluntary Arrangement Work?

A PVA is very similar to a CVA (Company Voluntary Arrangement) in which it’s a formal agreement between a partnership and its creditors, and a CVA is an agreement between a company and its creditors.

The procedures are essentially the same as well.

A PVA is a legal document which all members of the partnership must abide by.

The partnership will propose a repayment plan based on the debt in question to the insolvency practitioner.

Once the PVA has been agreed to and formalised, this will prevent the former creditors from chasing repayments.

Under the PVA, an insolvency practitioner will set up the trust which allows a singular payment to make each month, rather than many to various creditors, and it is up to the practitioner to ensure the repayments are made on time.

Any debt left over at the end of the PVA – which typically lasts 3-5 years – will be written off, and the business can continue trading without the burden of their previous debts.

When Can a PVA Be used?

There are many reasons why a business partnership might need to enter a PVA, such as:

  • A drop in revenue
  • Unexpected economic hurdles
  • Trading struggles
  • Loss of funding, investors or important clientele
  • Another form of financial trouble

These are just a few of the reasons why a company might seek to join a PVA.

However, it is crucial to contact a licensed insolvency practitioner who will advise on whether a PVA is the best option for your economic circumstances.

A PVA is only advisable if there is a likelihood of a return in profitability.

If the business partnership is likely to fall back into struggling financially after the PVA, then this hinders the partnerships chances of securing a PVA in the first place.

How Long Does a Partnership Voluntary Arrangement Take?

Typically, a PVA will last between 3-5 years.

However, the actual length of the PVA will vary between partnerships.

Due to the terms of a PVA, it is highly unlikely to be shorter than 12 months at the very least.

If you want to find out how to get started with a PVA, keep reading.

What Happens To A Business After Entering Into A PVA?

After entering a PVA, the business partnership will have a set of legal requirements which they are obligated to meet.

The business will continue to operate under the partnerships’ control, however, they may need to restructure their business to follow the terms of the PVA.

The partners remain liable for the debt in question but being allowed to continue operating lets them make the money needed to repay the debt.

They may need to find new clients or new investments to reduce their cash flow problems.

If a partnership fails to meet the terms of the insolvency legislation, then the insolvency practitioners can reassess the PVA proposal and implement the most appropriate route for the partners to meet their scheduled payments.

If the business partnership still fails, the insolvency practitioners association may result to forcing the partnership into liquidation, in order to reclaim the money owed.

Benefits of a PVA

There are many benefits of a partnership voluntary arrangement, PVA, such as:

  • Payments can be rescheduled
  • A new time frame for payments can be established
  • One payment a month, rather than payments to multiple creditors
  • The partnership can continue to trade without the threat of liquidation
  • Allows breathing space to manage assets
  • Allows free confidential advice and professional assistance with bad debts
  • No interest or charges on the debts
  • Creditors receive a higher return than if the business went under
  • Improves the long-term viability of the limited liability partnership
  • Helps maintain a relationship with creditors if PVA is successfully paid off

Disadvantages of a PVA

While there are many benefits of a PVA, there are also some disadvantages to bear in mind:

  • The PVA proposal might be rejected by the insolvency practitioners
  • Doesn’t confirm that debt problems and insolvency won’t reoccur after the PVA process has finished
  • Won’t be a viable option for businesses or partners that have extreme debts
  • A PVA may not be sufficient and each individual partner may need to sign an IVA

Gaining a PVA is a personalised experience and each business will differ in how they benefit from this kind of agreement.

Next up, we look at how to start a partnership voluntary arrangement, PVA, so continue reading to find out how to get started.

How Can I Start a PVA?

A PVA is voluntary, so, it is up to the partners to set the ball rolling by getting a free consultation from an insolvency company.

The insolvency company will then be able to assess whether a PVA is the best route for your partnership.

If a PVA is the best option, then the licensed insolvency practitioner will draw up a draft agreement which is presented to and discussed with the creditors involved in the debts.

The finalised agreement needs 75% of creditors approval. The creditors voting will be counted in a creditors meeting, in which each creditor has the opportunity to express their position.

If the creditors agree to the partnership agreements and any individual voluntary arrangements, then the PVA can be finalised.

Normally, there are no issues with getting creditors approval as a PVA will help them reclaim owed money.

Once the PVA is approved, the partners will start monthly repayments which keep them out of bankruptcy and give them the breathing space they need to get back on track.

Speak to one of the licensed insolvency practitioners that we have listed above who deal with PVA’s

Gaining access to working capital via a PVA

The lack of funding that results in partnership voluntary arrangements could be due to temporary issues, meaning the business still has the chance to be viable in the future.

The partners, therefore, could be able to gradually build back their cash flow and current overheads in a set period of time with the support of a PVA.

If partners have disposable assets that could be sold quickly to generate a large sum of economic capital, then the insolvency practitioner might note that this is enough to carry the company until their profitability improves.

Other Insolvency Services To Look Into

Other options for the partnership include the following:

A PVA is an agreement made between creditors and all partnership members, meaning it is often the primary course of action for failing partnerships.

If a PVA cannot be reached, individual business partners may be required to enter into an Individual Voluntary Arrangement (IVA) with their creditors.

An IVA follows the same terms as a PVA, however, it is up to the individual partner to make monthly repayments.

Typically, an IVA might take a little longer than a PVA, usually spanning between 5-6 years.

Partnership Terms

A partnership agreement is a legal document that dictates the way a business is run and details the relationship between each partner.

For a partnership to enter into a Partnership Voluntary Arrangement debt solution it is important all partners are dedicated to making a success in the future of the company.

Directors must agree to an official payment arrangement to the insolvency practitioner and directors may require their own Individual Voluntary Arrangements (IVAs) if the directors have signed any personal guarantees on debts.

Interlocking IVAs, serve to protect partners from personal bankruptcy whilst also safeguarding the business.

Do companies survive PVA?

For a partnership business to survive after using a PVA takes a lot of work and business changes.

Each partnership company has unique circumstances and challenges to get through.

Many PVAs can fail because of these common reasons:

  • Structural apathy – The fact the partnership is needed an insolvency practice to offer financial help means the structure of the business has been failing and needs to learn from the mistakes and restructure to survive
  • Bad leadership – When a partnership business has resorted to a PVA, something has gone seriously wrong and it may be weaknesses in the management team
  • Loss of contracts – Naturally when a partnership enters into a PVA, many customers start to question the debt crisis and move work elsewhere

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Other Debt Solutions

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The insolvency practitioner list above gives you plenty of options to choose the best IVA firm in April 2024.

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