Company Voluntary Arrangement (CVA)

Would your business benefit from a company voluntary arrangement?

A company voluntary arrangement (CVA) is a legally binding agreement between an insolvent company and its creditors. The CVA begins as a proposal that is sent to the creditors and shareholders of the insolvent company for their formal approval.

The agreement demonstrates why the creditors and shareholders would be better off approving the CVA proposal versus rejecting the CVA for an alternative insolvency method (such as creditors voluntary liquidation). The terms and obligations of the agreement are detailed within the CVA proposal and detail how much and when the insolvent company is required to pay contributions to the supervisor of the CVA.

The CVA will provide an estimated level of recovery to the insolvent company’s creditors (i.e. whether the creditors will be repaid in full or in part for the debt due to them). Using this solution could result in the company’s creditors being repaid more of the debt they are owed compared to the alternative if the company simply ceased to trade.

A well-structured CVA can rapidly improve cash flow whilst providing the company with a respite from creditor action and allowing the company directors to stay in control. Entering into a CVA will put a halt to the immediate demands of creditors, including the tax office (HMRC), postpone any possible insolvency petition and enable the business to be restructured.

Upon the successful conclusion of the CVA, the company will be debt free of any historical debts bound under the terms of the CVA (any outstanding debt that remains unpaid is then written off). It should not be ignored that failure to adhere to the terms of the CVA will likely lead to the company being placed into liquidation. In turn, this could result in action being taken by any subsequently appointed liquidator against the company’s directors.

There is, however, some flexibility available to the insolvent company, should it struggle to pay its monthly contributions due to a drop in profits or following a cancellation or postponement of a significant order(s). Through the supervisor of the CVA, the insolvent company can seek a variation to the agreement. Following the necessary approval, this could include a reduced level of monthly contributions or a payment holiday. Variations to the original agreement are usually permitted because the ultimate aim is to encourage turnaround and business rescue.


Here at My Insolvency, we pride ourselves on giving you honest advice and will always provide you with the options that are best suited to your company’s individual circumstances. 

If you would like to know more about a company voluntary arrangement (CVA) and whether it is right for you, speak to one of our specialist team on 0800 009 6106 or

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