CVAs 'could enable firms to survive recession'
Commercial insurance
10th September 2009
Enterprises could benefit from using company voluntary arrangements (CVAs) in order to weather the economic downturn.
According to the Association of British Insurers (ABI), the insolvency procedures, which enable firms to make a deal with their creditors in order to repay debts over an agreed period of time, can give enterprises "vital breathing space".
Commenting on a consultation on the arrangements by the Insolvency Service, ABI director of general insurance and health Nick Starling voiced his support for "a moratorium against creditor action", adding that it would enable troubled businesses to "develop a rescue plan for their creditors".
Mr Starling also suggested that CVAs should be extended to medium-sized and large organisations in order to reduce the number of enterprises turning to so-called pre-pack administrations, which he claimed had been "abused".
Insurance for business customers may also be interested in the fact that the ABI has urged the Insolvency Service to increase transparency relating to pre-pack administrations in order to provide unsecured creditors with greater protection.
For more information on how Giles can help you with your business insurance, Click here.
