Company Voluntary Arrangement ('CVA')

A CVA is an arrangement that allows a financially-challenged business the opportunity to resolve the difficulties with its creditors’ support so that it may return to profitability.

The CVA may involve payment of all or part of the debts owed by the Company. A set of Proposals must be prepared for creditors which will involve cash flow and trading forecasts, as well as a business plan. This must show how it is intended that creditors will be paid over a period of time. The CVA must be contrasted with the likely outcome for creditors in liquidation.

The Insolvency Practitioner will assist the Directors of A Company to prepare the Proposals and the forecasts to be put to Creditors. A CVA is a private arrangement between the Company and its creditors which avoids the damaging glare of publicity. It must be supported by at least 75% of those creditors voting at the creditors meeting. As with an IVA, once approved, it binds all creditors whether they voted for it or not.

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