business Uncategorized

What Is A Company Voluntary Arrangement?

A CVA can stop creditor pressure, turn around the business and give directors control once again. The insolvency practitioner will advise the company and draft the CVA proposal which will be put to creditors for a decision.

The resulting deal will usually pay back a percentage of the debt owed over a period of time, typically 3 years. It will be based on the debt level and ability to repay.


A company voluntary arrangement (CVA) allows a company in financial distress to propose an agreement to repay some or all of its debts over an agreed period. It can protect the company from further legal action by creditors such as a winding up petition or statutory demands, and also prevents the need to place a notice in the London Gazette that the business is in administration.

The directors of a company in financial difficulty will set out the terms of the proposal to their creditors and they will then vote on whether or not to approve it. If approved, the insolvency practitioner will take responsibility for enforcing the agreement.


A CVA is seen as the best option for a business that could be viable going forward but has been overburdened by historic debt. It allows directors to stop creditor pressure and turnaround their business by rebuilding sales and ensuring creditors are paid what is owed over a set period of time. Directors who agree to a CVA will remain in control of their company and can use the agreement to break lease agreements on underperforming sites, reduce rents and buy back assets from a landlord.


A company voluntary arrangement is a form of formal insolvency process that helps businesses at risk of collapse to rebuild sales and profits. This in turn will enable them to pay towards their debts over a period of time which, once completed, will see any outstanding debts written off. Employees not susceptible to redundancy will remain in their roles throughout the CVA, which can last up to a maximum of 5 years. The experts can support your business during this difficult time.

Recovering From A CVA

While CVAs can help a business turnaround, they are not without their drawbacks. The success or failure of a CVA depends on a wide range of factors, including the directors’ willingness to openly discuss the company’s financial position and take steps to address its historic debt problems.

The insolvency practitioner will produce a repayment proposal which is sent to creditors and must be backed by at least 75% of those who vote on it. This is a condition of being allowed to put forward a CVA, so it’s important to make sure the proposal covers as much of your company’s debts as possible.