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Company Voluntary Arrangement (CVA)

A Company Voluntary Arrangement ("CVA") is a "deal" between a company and its creditors and is legally binding. The deal may repay the creditors in full or in part over a period of time and in many arrangements a monthly contribution is made by the company into the CVA. Once the CVA is approved by creditors and shareholders no enforcement action can be taken by creditors bound by the CVA. Therefore, if a company's business is fundamentally viable but has cash flow or legacy debt problems, a CVA may allow time to rescue the company and the business.

Benefits of a CVA include:

the company continuing in business under the control of its directors;
creditors being prevented from continuing legal action or winding up petitions;
the format being very flexible and reflecting each set of unique circumstances.

Frequently Asked Questions

What if the company can't pay creditors back in full?	A CVA may not necessarily require payment in full of the company's debts but creditors will require transparency and justification for receiving less than 100% of their debt.
Will HM Revenue & Customs support a CVA?	HM Revenue & Customs will consider each proposal on its merits. Our experience and understanding of what HM Revenue & Customs require allows us to judge whether the proposal to be acceptable to them.
What happens to secured creditors like the bank or HP company?	Any proposal will need to take account of the views of secured creditors and not worsen their position. We would expect to contact the bank as part of the process and they will often agree to the account operating normally during the CVA.
How is the CVA put in place?	Documents are sent to creditors and shareholders setting out the deal and inviting them to meetings to consider the proposal. They may vote to accept, reject or accept subject to modifications the proposal. To approve a CVA 75% by value of unsecured creditors and a majority of shareholders must approve.
How long will it take to put it in place?	It depends on the complexity of each case. However, in most cases it will take about four weeks to prepare the documents, convene the meetings and obtain approval.
How long will it last?	It depends on the deal. If creditors are expecting less than payment in full they will expect to see contributions for five years.
What happens if the company can't meet its obligations?	Some flexibility on timing of payments is usually built into the arrangement. A variation can also be proposed to creditors alter the terms but, in the event that the problems are terminal, the company may be forced into Liquidation
What will it cost?	Each case is priced on its own merits and reflects its complexity and the amount of time required. We will be happy to give an indication of cost once we understand the intricacies of the case.
What if we have not got any cash?	We have come across this problem before! We may still be able to help by structuring the costs differently but, in any event, our first consultation is free so please contact us to discuss how we might help.

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