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Company Voluntary Arrangements (CVAs)


A Company Voluntary Arrangement, also known as a CVA, is a process which usually looks to enable a company to survive and try to overcome its financial difficulties. This is achieved by a company reaching an arrangement to settle its liabilities by paying all or a portion of them over a period of time (usually 3-5 years) at an agreed rate which is affordable to the company and satisfactory to its creditors.

If your business is struggling but has the prospects of becoming successful once again, a CVA could be a viable option for you to take and will protect against legal action taken by your creditors, while you get your business back on its feet.

A CVA must be entered in to under the guidance of a licensed insolvency practitioner to act as the nominee and supervisor for the process.

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The Proposal

A payment proposal will be formulated based upon the company’s affordability to repay its debts. It is then presented to creditors, who can then accept or reject the proposal. For the CVA to go ahead, 75% or more of creditors (by value) must accept the Proposal.


The Proposal details:

  • the length of the CVA (typically from three to five years)
  • the payments that the company will make into the CVA
  • the timeframes when creditors are expected to receive a dividend
  • the consequences in the event that the company breaches any of the terms.



The process of achieving a CVA is shown below in our flowchart. This details when the CVA is approved or how to try to get it approved when it is initially rejected.

By hovering or clicking over one of the sections, we also provide explanatory notes.



The Director(s) appoint an Insolvency Practitioner to act as Nominee. The IP will assist with the drafting of the CVA Proposal.


The IP will also submit the Proposal to the court, with a report confirming that he considers the terms to be workable and that he is willing to supervise the running of the CVA.


Once the Proposal is drafted, the Director(s) convene a meeting of creditors to consider its terms. Creditors are given a minimum of 14 days’ notice to review the Proposal. At the meeting, in excess of 75% majority in value of the creditors voting, is needed for the Proposal to be approved.

> 75% requisite majority of creditors approve

Creditors do not approve


The Proposals will also have to be approved at a meeting of the company’s shareholders. This is convened to take place after the creditors meeting and are approved by simple majority.


If creditors do not approve the Proposals, the Director(s) may look to modify its terms. The modifications may be considered at the initially convened creditors meeting. The meeting can instead be adjourned for up to 14 days for the modifications to be fully considered.

Majority of members approve

Modifications appproved

Modifications rejected


The Nominee will then become Supervisor of the CVA. His role will be to oversee the arrangement throughout its duration, making sure that its terms are upheld and taking measures in the event of a breach.


If the modified Proposals are approved by the creditors, they will then be considered by the company’s members at the shareholders meeting.


If the Proposals are rejected a CVA is no longer a regime that is available for the company. The Directors will have to explore other options.

Majority of members approve


Once approved the position is the same as in point 4) and the Nominee becomes the Supervisor.


What are the main differences between a CVA and other Insolvency Regimes?

The main difference is that a CVA is a way for the company to survive. The Administration procedure is sometimes used to assist with obtaining a CVA. However, more often than not, Administrations and Liquidations will usually signify the end of the company. In those cases, some businesses will survive, although they will be owned/operated by another company.

What will creditors be looking for when approving or rejecting a CVA?

There are two main things: what the likely return will be to them in a CVA compared to the alternative options and whether or not they believe the company can comply with its terms. The Proposal will contain a statement demonstrating to creditors that they will get a better return in a CVA than in a wind-up situation. It will also provide cashflow projections showing that enough cash will be available to pay the proposed payments.


If a CVA is approved how will it impact upon creditors?

If approved, the CVA will bind all unsecured creditors. Even those who voted against it or did not vote at all. This means that they cannot take steps against the company to recover liabilities owed prior to the CVA being approved.

How can a creditor challenge a CVA?

A creditor can challenge a CVA on the basis that they have been unfairly prejudiced by the CVA or that there was a material irregularity in the process to get it approved. The challenge is made by an application to the court.

What happens when a company in CVA does not comply with its terms?

This will be dealt with in the Proposal. Commonly, Proposals will provide that the Supervisor must petition for the Liquidation of the company if a breach is not remedied within the agreed timescale and that, if the CVA fails, he may still distribute any assets that he holds to the CVA creditors.

What is the difference between a Supervisor and an Administrator/Liquidator?

The Supervisor’s powers are set out in the Proposal and are limited to supervising the terms of the CVA. Administrators and Liquidators have far reaching powers enshrined in legislation.

Benefits of using us

SFP is an Award winning Insolvency company that provides expert assistance in Turnaround and Restructuring services.

Choosing the right practitioner from the start will have major implications on any case and here at SFP we will take the time and effort to look into your business accordingly.

Having worked with a large number of clients over the last 18 years, we pride ourselves on being a trusted partner to UK businesses who are looking to survive in what is becoming an ever-increasingly challenging business economy.

Get in touch with one of our experts and they will:

  • Listen to you in confidence about the challenges you currently face
  • Analyse your business finances to realise your current scenario
  • Help you understand available restructuring options
  • Recommend, define and agree the way forward
  • Support you through all processes as a result of your taken actions

Call us on 0203 5877700 or fill out the form and talk to us today.

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