Director information hub: Company Voluntary Arrangements
Putting a Company Voluntary Arrangement (CVA) in place.
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Company Voluntary Arrangement (CVA)
A CVA is a way for a viable but insolvent limited company to pay its creditors over a fixed period. It allows the directors to retain control of the company whilst continuing to trade.
Putting a CVA in place
Directors should seek the advice of an Insolvency Practitioner to decide if a CVA is the most appropriate option for the company.
Before you can apply to put a CVA in place, the board of directors must support the decision to proceed.
Once you have agreement you need to appoint an insolvency practitioner.
They will work with the company to determine what amount of debt can be repaid and a schedule for repayment.
There is a charge for doing this.
CVA conditions
For a CVA to be approved:
- notice of the proposed voluntary arrangement must be sent to all creditors
- shareholders must be invited to vote on the proposal
- at least 75% (by value) of creditors who vote on it must agree to the CVA
- the shareholders’ vote is based on a simple majority and if this differs from the result of the creditors’ vote, shareholders may apply to court
If a CVA is approved, it is legally binding on all creditors, including those who voted against it.
If the application for a CVA is not approved, other formal insolvency measures, including voluntary liquidation may take place.
Read further guidance on Company Voluntary Arrangements.