Company Voluntary Arrangement ('CVA')
A Company Voluntary Arrangement (CVA) can be an effective solution for companies experiencing financial difficulties but with a viable underlying business and a realistic prospect of recovery.
A CVA is a legally binding agreement between a company and its creditors, where the company proposes a structured repayment plan to settle outstanding debts. If the proposal is approved by creditors, the agreed terms become binding and the company can repay a portion of its debts over an agreed period, often allowing the business to continue trading.
One of the key advantages of a CVA is that directors remain in control of the day-to-day running of the business, while working towards meeting the agreed repayment terms.
Benefits of a CVA can include:
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Directors retain control of the business
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Reduced pressure from creditors
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A stay on legal action from existing creditors once the arrangement is approved
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Flexibility to structure repayments around the needs of the business
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Preservation of key customer and supplier relationships
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The potential for improved returns to creditors compared to alternative insolvency processes
A CVA can provide businesses with the opportunity to stabilise their finances and move forward, while offering creditors a fair and structured repayment solution.