A Partnership Voluntary Arrangement has a similar structure to a Company Voluntary Arrangement but is specifically designed for partnerships.
The PVA offers a lifeline to a partnership that could be a viable business but which is fighting a losing battle due to indebtedness. It does this by agreeing a realistic repayment plan with creditors which will allow the partnership to maintain its financial obligations and at the same time turn the business around.
The PVA is a legal agreement which a partnership can make with its creditors.
The aim is to allow the partnership to repay its debt at a more manageable level out of future profits, over a specific period of time. Alternatively, there may be a proposal to sell assets of the partnership and use the funds to offer a full and final settlement to the creditors, which might include banks, trade creditors, VAT and PAYE liabilities.
Unlike other insolvency procedures, the partners of a business that enters into a PVA are able to remain in control of the business. Upon completion of the PVA, any remaining outstanding liabilities are written off.