What is a Company Voluntary Arrangement? - How a CVA can help Your Business

Free Company Voluntary Arrangement Advice - Guide - CVA Case Studies - Law - Rules

When your company cannot meet its debts as and when they fall due, a Company Voluntary Arrangement proposal (“CVA”) may be the best option available to your company to relieve creditor pressure. For instance a CVA can help avoid a winding up petition being issued against your company and/or prevent a winding order being made. 


The purpose of a Company Voluntary Arrangement or “CVA” is to propose a 'deal' with the creditors. When a deal is agreed that prevents the creditors taking any enforcement action against the company. The deal you propose could, for example, be:


To effectively obtain interest free extended credit over, say, five years (in other words the existing debt is repaid over five years by way of instalments) or,
That only 50% or some other percentage of the total debt is repaid by way of instalments.

A CVA Proposal is drawn up by the directors with the help of an insolvency practitioner and is then forwarded to all of the creditors. The law sets out the information that must be contained in the CVA proposal but not what the offer to creditors should be.

The index on the left hand side of this page shows that there are two distinct legal types of CVA, as follows:


  • A Company Voluntary Arrangement without a moratorium, which was introduced into law by the Insolvency Act 1986 and

  • A Company Voluntary Arrangement with a “moratorium”, which was introduced into law by the Insolvency Act 2000 but only became available for use as and from the 1st January 2003.  A CVA with a moratorium gives directors powerful options when their company is under stress as during the period in respect of which the moratorium is in place creditors cannot take enforcement action against the company. This breathing space from creditor action allows the directors time to formulate a way forward which will hopefully provide a better result for the creditors, employees, creditors and stakeholders as a whole than if the Company were instead to be liquidated.


By reading the following CVA case studies you will see that there are many different ways in which you could structure your own company's voluntary arrangement proposal.


Case study number 1

Case study number 2 

Case study number 3


A Company Voluntary Arrangement with or without a moratorium could help your company avoid the consequences of statutory demands and winding up petitions as well as any other type of creditor enforcement action. Furthermore, an approved CVA will relieve your company of creditor pressure either by the elimination of much of the historic debt or by allowing your company to clear the accrued debt over several years.


If you would like free, no obligation advice, as to how a Company Voluntary Arrangement (“CVA”) could help you and your company, please contact Chris Parkman of Purnells on 01326 340579 or by emailing chris@purnells.co.uk.

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