CVA vs administration
A Company Voluntary Arrangement and administration are both rescue routes for a viable but struggling company, and the choice between them depends on how much protection you need and whether you want to keep control. In a CVA the directors keep running the company and repay creditors over a fixed period, usually three to five years. In administration a practitioner takes control and a legal moratorium immediately stops creditor action. Insolvency Act 1986; Insolvency Service
- CVA
- Repay debt over 3 to 5 years; directors keep control
- Administration
- Practitioner takes control; moratorium stops creditor action
- Choose CVA if
- The business is sound and can afford realistic payments
- Choose administration if
- You need urgent protection, or a sale is the best outcome
Talk it through, free and confidential No obligation. We review your situation and point you to the right next step.
Which route: CVL, CVA or administration?
1. Is the underlying business viable and worth saving? If not, the route is a CVL.
2. If it is viable, does it need urgent protection, or is a sale the best outcome? If yes, administration. If it can pay over time, a CVA.
- CVLCreditors' Voluntary Liquidation
- Business not viable. Close it properly: assets are sold, creditors paid in order of priority, the company dissolved.
- CVACompany Voluntary Arrangement
- Sound business, affordable payments. Directors keep control and repay creditors over 3 to 5 years, supervised.
- AdministrationRescue or going-concern sale
- Needs urgent protection or a sale. A practitioner takes control and a moratorium stops creditor action.
At a glance
| CVA | Administration | |
|---|---|---|
| What it is | A binding agreement to repay creditors over time | A formal procedure where a practitioner takes control |
| Who keeps control | Directors keep running the company, supervised | A practitioner acting as administrator takes control |
| Protection from creditors | Limited; the deal binds creditors once approved | Immediate legal moratorium stops creditor action |
| Repayment | A proportion of debt, usually over 3 to 5 years | Via restructure, sale, or the process |
| Best for | A sound business that can afford realistic payments | A company needing urgent protection or a sale |
| Typical length | A fixed term, usually 3 to 5 years | A defined administration period |
Control versus protection
A CVA keeps you in control but offers less immediate protection; administration offers strong protection but hands control to a practitioner. The right balance depends on creditor pressure and the rescue plan.
A CVA is a binding agreement to repay creditors a proportion of what they are owed, under the supervision of a Licensed Insolvency Practitioner. It works well when the business is fundamentally sound but burdened by historic debt and can afford realistic monthly payments. Administration is more interventionist: its moratorium stops creditor action, including any winding-up petition, so it suits a company that needs urgent protection from creditors, or where a sale or major restructuring is the best outcome. A practitioner will advise which fits your situation.
Where to go from here
- If you decide to speak to a Licensed Insolvency Practitioner, choose your own: our practitioner directory lists every practitioner on the official Insolvency Service register, and how to choose an insolvency practitioner explains what to ask. Always confirm their entry on the official register before you instruct anyone.
Common questions
Which gives more protection from creditors?
Administration. Its legal moratorium immediately stops creditor action, including any winding-up petition. A CVA offers more limited protection: the deal binds creditors once it is approved.
Can a company do a CVA and administration together?
Yes, in some cases a company enters administration for protection and then proposes a CVA to repay creditors over time. A practitioner will advise whether that combined approach fits.