Company Voluntary Arrangement (CVA)

A company voluntary arrangement (CVA) is a binding agreement between a company and its creditors, it allows businesses to repay their debts over a period of time by entering a formal agreement with creditors.

For many struggling enterprises, a well-planned CVA is a lifesaver. Entering into a CVA will result in directors making a legally binding compromise to help the company keep trading.

The CVA is flexible, and the terms of a CVA will depend on those proposed and agreed by the creditors. For example, a CVA may involve delayed or reduced payments of debt over a set period of time, capital restructuring, or an orderly disposal of assets. In cases where a company has a number of sites, for example a retail chain with multiple shops, a CVA may be used to terminate lease agreements on low performing outlets in order to ensure the ongoing survival of the company.

Why a CVA might be right for you?

It is the most advantageous form of insolvency for companies who want to retain control of their business. As unlike other insolvency procedures, in a CVA, the insolvency practitioner does not replace the directors of a company. 

Instead, the insolvency practitioner will act as a ‘nominee’ (prior to the CVA’s approval) and ‘supervisor’ (after the CVA’s approval). As a nominee, the insolvency practitioner will check to see whether a CVA proposal meets the legal requirements, and as a ‘supervisor’ they will check whether the terms of the CVA are being met by the company.

 A CVA is a legal process designed to prevent a business from going into liquidation or administration. It’s an alternate route to handling your debts and can be used by directors to stop or reduce the amount of repayments.