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Company Voluntary Arrangement (CVA)

What is a CVA?

A Company Voluntary Arrangement (also known as CVA) is a legally binding agreement between a Company and its creditors for satisfaction in part of its debts. Unlike other formal insolvency options, the Directors can continue to control and trade the business whilst the restructuring is effected by the Arrangement by way of (in most cases) regular contributions from the profits of the business going forwards.

In short, an Arrangement is brought about by the Company submitting a proposal to its creditors with the assistance of an Insolvency Practitioner. Generally speaking, if 75% of your creditors agree to its terms, it can be implemented and becomes binding on all of your creditors, irrespective of whether the creditors voted for the CVA or not. Further details on the procedure are detailed below.

If a CVA appears to be a good option for your business, an Insolvency Practitioner can assist in creating a proposal for your creditors that is both affordable and achievable for your Company, whilst offering a much higher return to your creditors than what would otherwise be available in other formal insolvency options such as a CVL or Administration.

At Parker Andrews, we will work closely together with you and your advisors to formulate a plan tailored to your specific needs and future plans for the business. If you require our assistance, we can also help with contacting your creditors prior to any formal proposals to obtain an impression on likely voting intention or acceptable levels of return.

When is a CVA appropriate?

  1. When your Company is enduring a short-term cash flow or solvency issue but the core business remains generally profitable

  2. When restructuring of the business practice and/or group structure is required

  3. When informal negotiations with your key creditors have stalled or broken down

  4. When the core business is capable of returning to profit in the near future

Benefits of a CVA

  1. Speed – A CVA can help cut business costs quickly without the need for any drastic appointment of a Liquidator or Administrator

  2. Low initial cost – Generally, a large injection of capital is not required as the majority of contributions for a CVA fall due post-appointment

  3. Power – A CVA can bind your creditors to an agreement, preventing any further recovery action. It also will prevent smaller creditors from implementing a proposal if the voting is sufficient

  4. Control – The company directors will maintain control and share the business moving forwards

  5. Discharge from debts – Once the CVA is fully implemented and all payments have been made under the CVA terms, the company will be fully discharged from the debts incurred included in the arrangement

  6. Public knowledge – Business owners need not worry about public awareness of the CVA as they are NOT routinely advertised and are solely a private contract between the company and your creditors

  7. Flexibility – a CVA can be modelled and formulated around your business model and practices. If circumstances change, variations can be proposed to the original proposal and put in place with agreement of the creditors.

However – caution!

You should be aware that a Company Voluntary Arrangement is an option of last resort. Failure to adhere to the terms of the proposal are likely to lead to the enforced winding-up of the Company.

A CVA may be unlikely to be accepted if a large proportion of your creditors are unwilling to vote in favour of the proposal.

It may be required that some element of restructure will be needed in the firm’s management structure and/or decision-making process.

A CVA will be included in credit searches and company records when new or continuing suppliers consider trading with you. It may likely that at commencement of the CVA, supplies will only be made on a pro forma basis and you should be prepared for the eventual impact this will have on your cash flow immediately after agreement of the CVA.


  1. Free no-obligation discussion

  • Contact the Parker Andrews office for a free, no obligation discussion about your requirements in the first instance. If a CVA is identified as the best option, we will outline the procedure and the information required to enable a full review the Company’s financial position.

  1. Face to face meeting with an Insolvency Practitioner

  • In circumstances where a CVA is proposed, it is generally beneficial for the parties involved to arrange a face to face meeting with an Insolvency Practitioner, such as Parker Andrews. This will enable you discuss the matter in further depth and ask any questions you may have, including likely contributions required from the Company, timescales and the possible impact on the business, both pre and post-approval of a proposal.

  1. Drafting of proposal & convening a meeting of creditors

  • Once Parker Andrews has been formally instructed, our liaison with you will continue as we prepare the proposal documentation according to the agreed plan. During this period, the company will need to provide additional financial information, including cash flow and profit and loss forecasts for the periods immediately after approval, demonstrating how the business will avoid further insolvency events in the near future. A meeting of creditors will be convened once the proposal has been agreed, further information on which is at point 5 below.

  1. Informal alternative – consultation with your creditors

  • During the period between issue of the proposal to creditors and the meeting of creditors to consider the same, a member of the Parker Andrews team will look to consult the Company’s major creditors and seek their opinion on the proposal (with your approval). This will ensure that the proposal has the highest chance of success moving forwards and alleviate any immediate financial pressure the Company may be experiencing.

  1. Creditors meeting

  • A meeting of creditors will be convened to consider their thoughts on the proposal. In order for the proposal to be agreed, a total of 75% of those voting (by proportion of sum claimed) will be required. Creditors can suggest modifications to the terms of the proposal within their vote. It is a choice for the Company on whether the suggested changes are accepted or not, although caution should be given where any refusal of any such modifications would render a vote as rejection of the proposal as a whole.

  • In addition to the above, at least 50% of the creditors voting excluding connected creditors must approve the proposal for it to be passed (in this context, connected means other linked claimants such as directors, family members or other linked businesses, amongst others) .

  1. CVA approved – implementation

  • Once the CVA has been agreed at the meeting, the terms of the Arrangement are to be implemented. It is normal practice for the Company to be required to bring all tax returns up to date in the process of preparing a proposal and the Company should ensure all future returns and payments are made on time. A standing order mandate will be provided to ensure all payments are made on time.

  • Notice of the approval of the proposal will be sent to all creditors bound by its terms. No advert is placed in the London Gazette and the Arrangement forms a private contract between the Company and its creditors. No enforcement action can be taken by a creditor bound by the CVA – you are now free to concentrate on restructuring your business.

  1. Conclusion of CVA

  • Once the Company has adhered to the CVA and complied with all the obligations in the proposal, the CVA will be complete and the Arrangement closed. Notice of this will be provided by the Insolvency Practitioner at the relevant time.

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