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Corporate Rescue: Empirical Evicence on Company Voluntary Arrangements and Small Firms.

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<mark>Journal publication date</mark>2000
<mark>Journal</mark>Journal of Small Business and Enterprise Development
Issue number3
Volume7
Number of pages14
Pages (from-to)241-254
Publication statusPublished
Original languageEnglish

Abstract

This paper focuses on the British company voluntary arrangement (CVA) which is a relatively new debtor rehabilitation process particularly intended to help financially troubled small firms resolve their difficulties. Based on a survey that is the largest and most comprehensive on the subject of British CVAs, this paper has three principal objectives: (i) to outline the characteristics of CVAs; (ii) to examine the relationships between CVA success and context; and (iii) to provide managerial and policy recommendations based on these findings. Among other things, the study finds that the overwhelming majority of CVAs are employed by small firms and that they can be particularly successful as a means of recovery when the economic fundamentals of the business are sound, regardless of the line of activity of the firm. Higher levels of success might be achieved, however, if the fixed costs of CVAs were subsidised in the case of very small firms and if more time were allowed during the process.