WHY
WOULD A COMPANY CHOOSE A CVA OR ADMINISTRATION
ORDER RATHER THAN RECEIVERSHIP OR WINDING
UP?
A company may seek a CVA or an Administration
Order because in the case of a CVA only they
can still run their business and better control
the process for rehabilitating the company's
faltering business. Sometimes the company
successfully works out a plan to return to
profitability; sometimes in the end, it liquidates.
In Administration there is a reorganisation.
A company may keep doing business. It may
return to profitability and even be returned
to the control of the shareholders and directors.
When a Receiver is appointed pursuant to the
provisions of a floating charge, the assets
subject to a floating charge will be liquidated
and the chargee will take those funds insofar
as they repay the debt. Any excess will be
returned to the company. Quite often though,
this results in the company eventually being
wound up.
In the case of a winding up, the company is
legally put to rest. It ceases all activities
and is very very rarely ever resurrected.
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