{"id":12931,"date":"2023-07-08T09:24:26","date_gmt":"2023-07-08T09:24:26","guid":{"rendered":"https:\/\/www.theukrules.co.uk\/?page_id=12931"},"modified":"2023-10-06T06:55:49","modified_gmt":"2023-10-06T06:55:49","slug":"company-voluntary-arrangement","status":"publish","type":"page","link":"https:\/\/www.theukrules.co.uk\/rules\/business\/closing-down\/company-voluntary-arrangement\/","title":{"rendered":"Company Voluntary Arrangement (CVA) Explained for Business"},"content":{"rendered":"

What is a Company Voluntary Arrangement<\/h2>\n

In simple terms, a CVA is a legally binding statutory agreement used in business. The United Kingdom has been using these types of company agreements since 1986.<\/p>\n

You might consider it as a rescue option. A CVA allows a limited company to continue trading while paying off its debt.<\/p>\n

Thus, it would take place between an insolvent limited company and its creditors.<\/p>\n

Company Voluntary Arrangements allow insolvent companies to repay their debts over several years. As a rule, the period of repayment will be a fixed term (often between one and five years).<\/p>\n

Even so, the terms of any proposal would need approval from at least 75% of the creditors (by value of the debt). After getting the creditors’ agreement, the company would be able to continue trading.<\/p>\n

Note<\/strong>: As a sole trader (or self-employed), you would not use the Company Voluntary Arrangement process. You would be applying for Individual Voluntary Arrangements (IVA) instead.<\/p>\n

<\/p>\n

\n

<\/p>\n

\n
\n
Company Voluntary Arrangement Process<\/h5>\n
    \n
  1. After examining the company affairs, the Insolvency Practitioner will draft an ‘arrangement’. It will cover the amount of debt the company can pay and the terms for a payment schedule. They would have to complete this within one (1) month of their appointment.<\/li>\n
  2. They would then write to creditors with the details of the arrangement and invite them to cast a vote on it.<\/li>\n
  3. Company Voluntary Agreements need approval from the creditors who are owed at least 75 percent of the debt.<\/li>\n
  4. Failing to get 75% approval from the creditors means the business may face voluntary liquidation<\/a> to pay off its debts.<\/li>\n<\/ol>\n

    As a rule, the company would not make the scheduled payments to the creditors. Instead, the payments would go through the Insolvency Practitioner until they get paid off in full. <\/p>\n

    Failing to meet the agreed payment schedule means any of the creditors can apply to wind up a business<\/a>.<\/p>\n<\/p><\/div>\n

    \n
    Company Voluntary Arrangement Advantages<\/h5>\n