Company Voluntary Arrangement (CVA) An agreement between a company and its creditors to pay a proportion of the debt over a defined timescale

A CVA can provide significant benefits to a struggling business such as:

  • Debt forgiveness - as part of the agreement creditors usually agree to write off some of their debt
  • Management keep control of the business
  • It gives the business breathing space from creditor pressure
  • Repayment usually involves an affordable monthly payment
  • Shareholders don't lose their investment
  • Customers are not normally informed about the CVA
  • Creditors are prevented from taking further action against the business
  • It lasts a predetermined length of time
  • No investigation of the director's conduct is undertaken
  • It doesn't require all creditors to agree but legally binds them all
  • Employees who are made redundant are paid their redundancy entitlement by the government; and
  • The return to creditors is typically higher than other forms of insolvency such as liquidation.

A CVA usually involves making a monthly payment out of profit for a period of between three and five years. The exact terms of the agreement depend on the characteristics of the business, but it aims to provide a fair return to both company and its creditors. Once the CVA has completed successfully, any amount remaining due to creditors is legally written off and the company cannot be pursued for it.

Our service

If your business is struggling, a CVA may be the most appropriate solution and provide it with a fresh start.

Once engaged, we will review the company's situation and structure a CVA to provide maximum benefit to the company and its creditors. During this process, there may be an opportunity to restructure the business to ensure that it is capable of cash and profit generation.

We will often have, or assist with, discussions and negotiations with key suppliers or creditors to ensure that the plan is acceptable and feasible. This reduces the risk of any surprises before and during the term of the agreement.

More information

If you require further information or wish to discuss which of these options are appropriate for your business please contact us via our webform or call us on 0844 6933108.