A Company Voluntary Arrangement (CVA) is a formal repayment plan, enabling insolvent companies to repay their unaffordable debts over a period of 5 years.

Some of a CVA’s benefits:

  • Allows the company to repay its debts in affordable, monthly instalments.
  • Writes off unaffordable unsecured debts.
  • Formal and legally binding.
  • Protects your company from creditor pressure and legal action.
  • No upfront fee.


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    Company Voluntary Arrangement (CVA)

    Company Voluntary Arrangements (CVA) are frequently sought by Directors who feel their company has a viable future and are prepared to work hard to keep it alive.

    What is a Company Voluntary Arrangement?

    The government introduced the Company Voluntary Arrangement (CVA) in 1986. Its intention – offering an alternative procedure to companies that would otherwise face compulsory liquidation or voluntary liquidation. The use of a CVA can be a rescue device following a period of administration, or for companies looking for a way to repay creditor debt whilst continuing to trade.

    The procedure is available to any company registered in England or Wales. It enables the company to reduce its debt levels, improving cash flow by coming to an arrangement with creditors. The company typically makes only one agreed, affordable monthly payment to the appointed insolvency practitioner. They act as supervisor distributing the money on a pro-rata basis amongst the creditors included. The amount paid over the agreed term, up to five years, can vary, from repayment in full to a percentage of the debt.

    CVAs can be an excellent way to solve serious debt problems and, in sixty months or less, the company can be legally debt-free. There will be a write-off of any outstanding debt once the arrangement is successfully completed.

    We will work with you to understand your company’s debt levels; we will then establish a level of debt you can afford to pay back. This will be based on affordability, and we will help you look at your cash flow to work this out.

    Why use a CVA?

    A Company Voluntary Arrangement is the ideal rescue device for an insolvent company that has accumulated debt with creditors. It helps to find a way to repay its liabilities and continue trading. Companies usually seek to enter a CVA to avoid liquidation or to remove creditor pressure.

    Read more about creditor pressure

    CVA costing

    A Company Voluntary Arrangement needs a licensed insolvency practitioner to help arrange and maintain the formal agreement with your creditors. Our fees are automatically deducted from your monthly repayments to creditors and are not an additional cost.

    We don’t charge any upfront fees for a CVA. Fees are taken from the monthly contributions.

    If creditors are currently demanding repayments from you regardless of whether you can afford it, often the monthly repayments will be less than the amount creditors are asking for.
    There is no set cost for a CVA, as a lot depends on the company’s circumstances. We will assess your situation and discuss costings with your company director before proceeding.

    Read more about how CVA fees are charged

    When will a CVA be most effective?

    • Your company is facing liquidation but would prefer not to go down that road.
    • You want to make sure suppliers do not lose monies owing to them.
    • Your company has the potential to be profitable with the removal of creditor pressure.
    • Your company has bad debts or late payers affecting its short-term financial health.
    • Your company has a viable business model and a full order book. It is being held back by short-term cash flow problems.
    • Your company requires restructuring to be successful.
    • You have been unable to negotiate repayment plans with creditors.
    • You want to retain day-to-day control of the company.
    Company Voluntary Arrangement (CVA)

    Benefits of a CVA

    A Company Voluntary Arrangement has many advantages, not just for its creditors, but also for the company’s directors and shareholders.

    • There are no upfront fees. Other company rescue solutions, such as pre-pack administration, may require significant upfront costs. Fee charges for a CVA refer to the implementation and management of the arrangement. Contributions usually pay for these before distributing to creditors.
    • Once the arrangement is set up, the company is protected from the initiation or pursuing of legal action such as county court judgements (CCJ’s) or winding-up petitions. The business receives protection from unsecured creditor pressure.
    • The company pays just one affordable monthly payment to the insolvency practitioner who acts as Supervisor and distributes payment equally among your creditors.
    • No interest or charges from historical debts included in the arrangement can be added from the date of approval.
    • The core business may continue to trade; this provides the company’s employees and directors with employment.
    • In most cases, a CVA is a cost-effective alternative to other insolvency procedures. It is available to a company with financial difficulties, much like administration or receivership.
    • At the end of the CVA term, any outstanding unsecured unpaid debt, even liabilities to HMRC, is written off.

    Company Voluntary Arrangements offer a wealth of benefits to a company experiencing financial difficulties. A well-structured CVA can result in a company reducing its monthly outgoings, improving cash-flow and reducing the overall amount of unsecured debt owing.

    The main advantages of a CVA

    A CVA’s purpose is to help struggling businesses and they are relatively flexible arrangements. If your company’s situation changes and it is struggling to meet repayments, a variation to the arrangement may be put to creditors. If accepted, the monthly repayments could be reduced for a set period, or a payment holiday permitted. The intention behind these variations is to help companies deal with changes in circumstance.

    Consequences of a CVA

    There are many advantages of a Company Voluntary Arrangement for companies struggling financially. However, it is also important to consider the consequences before deciding how you should proceed.

    • The process could fail if no changes are made to the existing business model. There is an old saying, “if you keep doing what you’ve always done, you’ll keep getting what you’ve always got.” If your company continues making the same mistakes, it will end up in the same position in the future.
    • A CVA is a formal agreement and to ensure against failure, adhering to the terms in the CVA proposal is crucial. Not adhering to the requirements of the proposal will likely lead to voluntary or compulsory liquidation. This can, in turn, expose directors to the possibility of wrongful trading action.
    • Whilst there is an element of flexibility, CVAs can be quite rigid, after all, they are legal schemes. In general, the CVA terms will be quite strict in what it expects the company to pay and over what period.
    • During the first few years of the arrangement, it will be difficult or impossible to get credit. You may have to pay for goods or services on a Pro-forma invoice basis or cash on delivery. This is while you build up goodwill with your suppliers.

    The main disadvantage of a CVA

    Companies House will register the fact the company is entering into a CVA and there will be a recording of it on its credit file. This means it will be more difficult for the company to set up credit accounts or borrow money while in this structure.

    Another overlooked implication is how the information on the company’s credit file can affect new business relationships in the future. Many companies who are looking at doing business with you will check the financial viability of the company before working with you. The fact a CVA is in operation may mean that they feel that it represents a risk, so they may refuse to do business with your company.

    More on the advantages and disadvantages of a CVA

    A CVA can only be carried out by a licensed insolvency practitioner.

    Our Company Voluntary Arrangement process

    A Company Voluntary Arrangement lasts around five years, give or take, with one monthly sum being taken from the company bank account for us to distribute amongst your unsecured creditors. Below is a step-by-step flow of the procedure.

    Discuss options with an insolvency consultant
    The first step is to investigate your options with a professional insolvency consultant at Wilson Field. We will discuss your company’s current position, explaining the various options available, which will include voluntary liquidation, CVA or pre-pack liquidation. We will work with you to find the best solution.
    Face to face appointment with a consultant
    The next step is a face-to-face meeting. One of our insolvency specialists can meet you at your home, your place of work or a convenient location of your choosing. At the meeting, we will discuss your options in further detail and more depth. This initial consultation and advice are entirely free of charge.
    Gathering information
    Once directors agree a CVA is the best solution to your company’s financial difficulties, Wilson Field needs to be formally instructed to work on your behalf. Once instructed, our CVA team will work with you collating the relevant information necessary for drafting a proposal.
    Drafting the proposal
    The proposal details a number of things including:


    • The history of how the company got into financial difficulty and how it will avoid future problems.
    • How much a company can afford to pay each month and how much will be paid to creditors.
    • Information regarding the company’s current financial position.
    The directors review the proposal
    After drafting, the directors can discuss and review the proposal. They can and should make amendments where applicable until it is acceptable. A copy is sent to creditors and shareholders once it is signed off by the director.
    CVA Moratorium
    If creditor pressure becomes a worry during CVA set-up, an application may be made to the court for an official CVA Moratorium. Once in place, your company’s creditors will no longer be able to take any legal action. This effectively acts as breathing space for the insolvency practitioner, allowing them to hold a creditors’ meeting for them to vote on the proposal. Formal CVA Moratoriums are useful but their use is rare. This is due to the risks involved for the insolvency practitioner and their difficult implementation in practice.
    Informal agreement with unsecured creditors
    As an alternative to CVA Moratorium and to avoid legal action by the creditors against the company before the CVA is agreed, we favour informal agreements between the debtor company and its major creditors. After instruction, our first task is to contact all your unsecured creditors advising them about the CVA plan. We inform them that the company has financial difficulties. As such, the company cannot afford to pay its historical liabilities.


    We explain that the company is exploring the possibility of a CVA and in the meantime, the company needs to continue trading. Inform them that you will still need to buy products or services from them but will do so on a “cash on delivery” or “pro forma basis”. We then ask them for their help in giving you some breathing space to allow us to prepare a proposal.

    You can continue to trade with your creditors on a cash basis. This will prove the company is a going concern which will be meeting obligations. The likelihood of accepting a CVA will be stronger if creditors have some faith in the company to keep up monthly payments.

    The creditors meeting
    By law, creditors and shareholders have to be given a minimum of 14 days’ notice of a creditor’s meeting.


    A company director should attend, but it is not obligatory. Creditors have the opportunity to vote in favour or against your CVA proposal. They can vote whilst in attendance at the meeting, or by proxy. Voting by proxy means they can vote via a third party, by post or e-mail. At least 75% by value of voting Creditors need to vote in favour of your CVA proposal for approval.

    In some cases, the proposal may not be acceptable to creditors and a revisited proposal incorporating modifications may have to be resubmitted for their approval.

    In addition, there will be a second creditors vote, taking place without ‘connected’ creditors present. For the proceeding of the CVA, this requires at least 50% of voting creditors to be in favour. Connected creditors are usually individuals, such as company directors or employees, who provide unsecured finance to the company.

    Your CVA will begin
    Once your company’s arrangement is in place, the monthly payments already in the agreement will be made. The collection of money is monthly, distributed amongst your creditors on a pro-rata basis, normally annually. The agreement is legally binding, and its terms bind your creditors and your company for its duration. Creditors will not be able to legally pursue you as long as your company makes the regular repayments each month.
    End of your CVA
    The CVA finishes at the end of the agreed term after final payment has been made and all proposal conditions have been adhered to. Most CVAs are on five-year terms meaning they conclude after the 60th monthly payment. At that point, any outstanding unsecured debt will be written off, and your company will be legally debt-free.

    In summary

    A Company Voluntary Arrangement (CVA) is an excellent way to get your company back on track if it has suffered a debt but ultimately has a workable business model. It gives it time to recover and stabilise its finances, allows directors to remain at the helm of the company, and ultimately writes off unaffordable company debt which would otherwise have been pursued by your unsecured creditors. However, there are drawbacks to consider before deciding if a CVA is the right procedure for your business and its particular set of circumstances.

    How we can help

    If your business is in trouble, but you believe it could succeed without any intense creditor pressure, a Company Voluntary Arrangement could be the right option. If you think your company has what it takes and you’re willing to do what it takes to make the arrangement work, we can help talk you through the processes involved. Alternatively, if it isn’t the best option for your company, we can advise you on the alternative solutions available.

    If a CVA is not appropriate

    Sometimes, your company debt can be of such a level that a CVA won’t be appropriate, or it can’t continue to trade in its current form. The company may need restructuring or closing completely. In these scenarios, we can offer options to restart the company via administration or close the company through liquidation.

    See more company recovery options

    Help for individuals

    If you’re struggling with personal debt to multiple creditors and wish to avoid bankruptcy, there is a similar procedure for individuals called an Individual Voluntary Arrangement (IVA). This arrangement helps you pay back a portion of your debt in monthly instalments and stops all creditor action for the duration.

    Find out more about an IVA

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