TARGETED PARTNERSHIP VOLUNTARY (PVA) SUPPORT

The natural first step in any partnership voluntary arrangement procedure should be an in-depth assessment of the partnership’s financial position. This assessment should be undertaken by an experienced insolvency practitioner.

They will undertake a thorough review of the partnership’s debts, assets, income streams, and liabilities, among other things, in order to determine whether a PVA is a viable option. 

In order to maximise the chances of success, this stage in the process demands detailed, open, and honest discussions.

With the initial assessment complete, the insolvency practitioner for your case, in collaboration with the partners, will oversee the preparation of a formal partnership voluntary arrangement proposal. This should outline, in full, the terms of repayment, so will need to include the amount to be paid, expected time frame for repayment, and any other conditions that would need to be agreed upon to avoid ambiguity down the line. 

The proposal sets out how the creditor can expect to be paid across the next few years — as well as putting a time frame on how long the business will have to conduct a full-scale recovery. 

Once completed, the partnership voluntary arrangement proposal will then be presented to any and all creditors currently awaiting repayment. Once they have had a chance to review the terms, a meeting will be held for the creditors to vote on whether to agree to a PVA or not. In order for approval, the PVA must have a ratio of 75/25 (by value). 

Should the majority of creditors approve the terms stated in the proposal, the arrangement will become legally binding for all creditors — even those who opposed the terms presented. 

It is important to note that any aggrieved creditors (who may have been outvoted during the approval stage) have the right to formally object to a partnership voluntary arrangement in an attempt to stop it in its tracks. A challenge must be made within 28 days of the beginning of the PVA formally starting, or from when creditors were made aware of the plans. When an objection is made, it then falls to the court to determine if it is “unfairly prejudiced’’ to the aggrieved party, or if there are any irregularities in the partnership voluntary arrangement procedure that would make the entire PVA invalid.

Once approved, the PVA will immediately go into effect. The most immediate effect of this is that, as per the agreed terms, the partnership will begin making payments as-per the accepted schedule. However, interest on the debt is frozen, and creditors are barred from undertaking legal action during the stated period.

Insolvency practitioners will be on hand to oversee the implementation of the arrangement, ensuring that any payments are made on time and that all parties involved are adhering to the PVA. 

Throughout the duration of the PVA, it falls to the insolvency practitioner to oversee and monitor how things are going. They will review the arrangement’s performance and provide updates to creditors. The purpose of this continued monitoring and reporting is to be certain that the agreed plan is on track, and that the aims set out at the beginning are being met — i.e financial health is getting gradually better.

If any issues were to arise during the partnership voluntary arrangement procedure, for example the partnership faced issues with their operation or incomings took a hit and repayment would be impossible for a period, it is possible for adjustments to be made. However, all parties must agree to the proposed changes for them to take effect.