Company Voluntary Arrangement
Often referred to as a CVA, a Company Voluntary Arrangement is an insolvency procedure that can be used by a company with significant business debt. A CVA creates a binding agreement with creditors regarding the payment of debt, either in its entirety or over an agreed period of time. The process can help insolvent companies continue to trade, allowing directors to focus on recovery instead of the stress that comes with the business’s debt.
A CVA can be proposed by the directors, administrators or liquidators of a company. A CVA cannot be proposed by creditors or shareholders.
Before the CVA proposal is made, the business can make an application to court for a moratorium which prevents creditors from taking action against the company or its property for up to 28 days.
When the CVA has been proposed, a nominee (who must be an insolvency practitioner) reports to court on whether a meeting of creditors and shareholders should be held to consider the proposal.
At this meeting a CVA will be approved if 75% of the creditors agree to the proposal. The insolvency practitioner then becomes the supervisor of the CVA. A CVA can be undertaken during an administration or if the business is in liquidation, as well as any other time. The company can also continue to trade during the CVA process and afterwards. Once it has been carried out, the company liabilities to creditors are cleared.
Under which circumstances does a CVA become appropriate for a business?
There are many situations where a CVA can be of help:
What are the advantages of a CVA?
For more information on CVAs and how we e can help with business debt and insolvency, please call us or visit our contact page for further details.