What is a CVA?

If you run a company that is insolvent you can implement a Company Voluntary Arrangement (CVA) to pay your creditors (either in part or in full) which prevents them from enforcing further legal action for recovery.

A CVA is an arrangement over a specified period agreed by creditors and subject to specific agreements which the company must adhere to during the course of the arrangement.

Having a CVA approved enables the company to continue to trade in most instances securing both on-going contracts and employees.

One of the advantages of a CVA is that it is a voluntary procedure normally viewed more favourably by creditors as it prevents further losses and generally returns a higher return than other insolvency procedures.

A CVA will increase stability enabling the business to focus on sustaining profitable trading in order to ensure payment is made to the creditors incurred as a result of post CVA trading and those governed by the terms of the proposals agreed.

Furthermore the directors are left in control of the business and its day to day decisions.

Once a decision is made to utilise this process, 75% of those creditors voting at the meeting convened must approve the proposals, which can be the subject of modifications.

The advantages of a CVA

  • A company will not be subject to any further legal action from creditors
  • Business owners will get time to rescue the business
  • Most creditors will welcome the chance to recover their money as the business recovers
  • It is cost effective compared with other insolvency procedures Payments can be structured
  • Directors have direct input in the CVA and a measure of control The company can continue trading unimpeded
  • The directors will not face investigation

The CVA procedure will be overseen by a Licensed Insolvency Practitioner. Appointing the right insolvency practitioner will ensure everything possible is undertaken to ensure the solutions proposed are achievable by the business and agreeable to your creditors.