Company Voluntary Arrangement (CVA)

A Company Voluntary Arrangement, or CVA, is a legally binding deal between a company and its creditors to repay some or all of its debts over a fixed period, usually three to five years, while the company keeps trading. It is proposed with the help of a Licensed Insolvency Practitioner, who acts as nominee and then supervisor. Creditors vote, and the arrangement becomes binding on all unsecured creditors if those representing at least 75% by value of those voting approve it. A CVA suits a fundamentally viable business that has fallen behind, for example after a one-off shock, and that can afford a realistic monthly contribution from future profits. It avoids liquidation, keeps directors in control and protects jobs, but it requires honest, achievable forecasts, because failing a CVA usually leads to liquidation. It is one of the main UK business rescue tools. Insolvency Act 1986, Part I; gov.uk

Key facts

What it is: A binding deal to repay creditors over ~3 to 5 years
Approval needed: 75% by value of creditors who vote
Who keeps control: The directors, supervised by a practitioner
Best for: A viable business that can afford realistic monthly payments
Risk: Failing the CVA usually leads to liquidation

When a CVA is the right tool

A CVA works when the business can trade profitably going forward but is weighed down by historic debt such as HMRC arrears or supplier balances. It lets you keep trading and keep control while paying what you can realistically afford. If the business is not viable, liquidation is usually more honest and cheaper.

Common questions

Does a CVA affect my credit and contracts?

The company enters a public arrangement, which suppliers and lenders can see, so terms may tighten. But it avoids the far greater damage of liquidation and lets the business continue.

What happens if I miss CVA payments?

The supervisor can terminate the arrangement, which usually triggers liquidation. That is why the monthly figure must be realistic from the start, based on honest forecasts.

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Company Voluntary Arrangement (CVA). A Company Voluntary Arrangement, or CVA, is a legally binding deal between a company and its creditors to repay some or all of its debts over a fixed period, usually three to five years, while the company keeps trading. It is proposed with the help of a Licensed Insolvency Practitioner, who acts as nominee and then supervisor. Creditors vote, and the arrangement becomes binding on all unsecured creditors if those representing at least 75% by value of those voting approve it. A CVA suits a fundamentally viable business that has fallen behind, for example after a one-off shock, and that can afford a realistic monthly contribution from future profits. It avoids liquidation, keeps directors in control and protects jobs, but it requires honest, achievable forecasts, because failing a CVA usually leads to liquidation. It is one of the main UK business rescue tools.

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