A legally binding agreement between a company and its creditors, allowing a proportion of its debt to be repaid over time. This structured repayment plan provides breathing space for businesses
How Voluntary Arrangement Works
Assessment & Proposal An insolvency practitioner reviews the company’s financial position and drafts a CVA proposal.
Creditor Meeting & Approval Creditors vote on the proposal, with at least 75% (by debt value) required to approve it.
Legally Binding Agreement Once approved, the CVA becomes binding on all creditors included in the arrangement.
Regular Payments & SupervisionCompany makes structured repayments under the supervision of the insolvency practitioner.
Completion & Debt Resolution Upon successful completion, remaining eligible debts may be written off.
Benefits of a CVA
Avoids Insolvency Allows companies to continue trading while repaying debts.
Flexible & Structured Debt Repayment Offers a manageable repayment schedule tailored to the business’s cash flow.
Legal Protection Prevents legal action from creditors while the arrangement is in place.
Continuity of Trade Ensures that operations can continue while a recovery plan is developed and implemented.
Preserves Business Operations Enables partners to restructure and improve financial stability without ceasing trade.
Potential Debt Write-Off Any remaining eligible debt may be written off upon completion of the CVA.
Why choose a Voluntary Arrangement?
A CVA may be suitable for companies that:
- Have unmanageable unsecured debts but a viable core business.
- Wish to avoid formal insolvency procedures such as liquidation.
- Need structured creditor agreements to continue operations.
- Want to retain control of the business while addressing financial difficulties
- Require legal protection from creditor action during the restructuring process.
- Seek to improve cash flow by consolidating debts into manageable repayments.