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What is a company voluntary arrangement?
A company voluntary arrangement (or CVA) allows directors of a financial distressed company to reach an agreement with its creditors regarding payment of its debts. A CVA offers a positive way forward for a potentially viable business
Last Updated: 07/02/2025
The process
The CVA process has to be carried out by a licensed insolvency practitioner but unlike administration and liquidation the directors remain in control. This process is not dissimilar to the Chapter 11 process in the US where companies attempt to trade out of difficulties while receiving Court protection from creditors.
Advantages of a CVA are that creditors cannot take action against the company during the CVA and once it has been completed the company has no liability to its pre CVA creditors. Although a CVA is not suitable for every financially distressed company it can allow the company to trade through its difficulties and give the directors more time to get their finances back on track without threat from creditors.
When might a CVA be appropriate?
- When a company is struggling under the burden of debts but still a viable business.
- For directors wishing to retain control of the company so it can trade out of difficulties.
- Where creditors can be reassured that the repayment proposals are realistic.
Key points to remember
CVAs are usually only suitable for companies that have a potentially viable business not too damaged by a prolonged period of financial difficulties. Seeking early advice can mean the difference between rescue and insolvency.
How can we help?
Our experts are able to help you maintain business’s critical cashflow functions – by sitting alongside you in negotiations with suppliers, HMRC and banks and even providing interim management solutions.
Director
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- hayleywatson@mw-w.com
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- Nine Hills Road, Cambridge, CB2 1GE
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