Company Voluntary Arrangements

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A CVA is an option for a company that has a viable business

A Company Voluntary Arrangement (CVA) is an option for a company that has a viable business but may be facing financial strain, or increased creditor pressure as a result of poor cash flow.  It is a form of composition (similar to an Individual Voluntary Arrangement), which will be overseen by a licensed Insolvency Practitioner (“IP”).

The purpose of a CVA is to provide the company with ‘breathing space’ so that it can continue trading, whilst making an affordable monthly contribution in relation to its existing debts. Monthly repayments are usually made for a period of 60 months, but the duration can be shorter if this is acceptable to the company’s creditors’.

The amount repaid is different in every case, because it depends on the company’s affordability.  The company’s financial position will be reviewed regularly to ensure that the agreed repayments remain at an affordable level. The CVA will include all of the company’s unsecured creditors, but cannot bind the secured creditors.  

Is a CVA a suitable option?

A CVA is commonly sought by director(s) who are confident that the company has a viable future, and are committed to keep it trading.  A CVA may also be the most appropriate option where a company is faced with short-term threats to its financial health (such as bad debt, or late payment).

The CVA procedure is available to any company, registered in England or Wales.  Usually, the terms of the CVA will require the company to make affordable monthly payments for a fixed period.  However, if a company has an amount of money (or surplus asset available), it is possible for a CVA to be agreed based upon a single lump sum contribution.  All contributions must be paid into the CVA, which is implemented and monitored by the IP.

If it is agreed that a CVA is the best option, then the next steps will be to nominate an IP to act in relation to the CVA and work with that IP to draft CVA proposals.  If it transpires that a CVA is not a suitable option, then the IP will explore the other options available, such as liquidation.

What is the role of the Insolvency Practitioner?

The role of the IP varies throughout the various stages of the CVA.     


Initially, the IP will provide advice as to the most appropriate solution, keeping both the company’s objectives and the creditors’ in mind.  This is likely to involve a detailed review of cash flow forecasts, existing work in progress, and the future viability of the business.


If a CVA is the most appropriate option, the directors’ will formally instruct the advising IP to act as the ‘Nominee’ in relation to the proposed arrangement.  At this stage, the CVA proposal is drafted, taking into account previous financial reviews, and the company’s assets and liabilities.

The directors’ may suggest terms or request amendments, but the Nominee’s primary responsibility is to ensure that any final proposal is fit to be put forward to the company’s creditors’ and will have a reasonable chance of being approved, and successfully implemented.  The Nominee will produce a report to this effect and submit this to Court and the company’s creditors’.

The Nominee will be responsible for liaising with the company and creditors’ regarding approval, and obtain consent as to any final changes to the proposal.  Once the CVA proposal has been approved, the Nominee’s role will change, to Supervisor of the approved arrangement.


Overall, the Supervisor is responsible for ensuring that the CVA is implemented in accordance with the agreed terms and conditions.

Although the directors’ retain day to day management of the company, the Supervisor will collect and monitor the company’s contributions, review quarterly management accounts, and also ensure that all requests by creditors’ and shareholders’ are dealt with promptly.

It is always helpful for the directors’ to maintain regular contact with the Supervisor and their staff. 

Benefits and Risks of CVA


The main benefit of a CVA is that the company continues trading and the business is preserved.  More crucially, the company can avoid liquidation, which saves jobs and safeguards investments.

A CVA allows the company to repay an affordable amount, with a proportion of debt being written off once the arrangement has been successfully completed.  Repayments under a CVA are affordable and condensed into a single monthly payment. Alternatively, the company can offer a lump sum in full and final settlement, or a combination of the two.

The Supervisor will not interfere with any decisions in relation to the daily running of the business, but will communicate clearly with those creditors’ bound by the CVA.  This will minimize any interruption to continued trading, and provide continuity to customers and staff.  In addition, the Supervisor is not required to undertake an investigation into the conduct of directors’. 

Generally, the timescale from initial contact with the IP, to agreement of a CVA, is 6-8 weeks.  It will take a number of weeks to produce a final draft of the proposal document, however the speed at which this can be done will depend on how quickly the directors’ can gather necessary information.  If the company is under intense creditor pressure, then steps can be taken to obtain legal protection against any other proceedings.  This protection is known as a ‘moratorium’ and further information can be found within our FAQ’s.


There are some risks to a CVA and these should be considered in full.

A CVA must be approved by both the creditors’ and shareholders’ of the company. At least 75% of the creditors’ (by the value of debt) must vote to approve the proposal, and at least 50% of shareholders’ must vote to approve the proposal.

Once a company enters into a CVA, the Supervisor must notify Companies House.  The company’s filing register will then be updated to reflect that the company is subject to a CVA, which could result in some suppliers hesitating to extend further credit.  Initially the company may need to pay suppliers on a pro forma basis, until it has built up a history of timely payment in relation to trade debts which arise post-approval.

Although repayments in a CVA will be determined by affordability, these repayments will be subject to annual review, and the anticipated return to creditors’ should be maximised as much as possible.  This could mean a restriction on salary increases, and dividends.
The Supervisor of a CVA will not be required to investigate the conduct of the company’s directors’ (or former directors), if there is any evidence that conduct has been severely lacking, the Supervisor is obliged to report this to creditors’ which might impact on their desire to support the proposals. 

A CVA proposal is subject to review by the IP acting as Nominee. That IP will only recommend that the company’s creditors’ should be invited to consider the proposals where it can be demonstrated that there is a clear balance of fairness, and that the company’s proposals merit serious consideration.

Careful consideration must be given to all options available to a financially distressed business.  For more advice, fill out our

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We had never heard of a CVA and had concluded that the only solution was cessation of trade. The Business Debt Advisor talked us through all the possible solutions and we were quite simply amazed that creditors would accept less than payment in full. The initial period of trading after the CVA was approved was initially tough as certain creditors would only trade on a pro-forma basis but once they realised the business was not going to fold, we were able to trade on normal credit terms. The team at The Business Debt Advisor were extremely professional and we are delighted with the outcome especially as they kept their costs to a minimum.