What is a Company Voluntary Arrangement (CVA)?
A guide to CVAs for companies seeking to restructure debt in England and Wales.
Short answer
A Company Voluntary Arrangement, or CVA, is a formal agreement that allows a company to repay all or part of its debts over time while continuing to trade. It can work where the business is still viable but cannot meet its liabilities under existing terms.
Plain-English explanation
A CVA is designed for companies that need breathing space and a structured deal with creditors, but still have a business worth saving.
Instead of closing immediately, the company proposes a repayment plan. If creditors approve it, the arrangement becomes binding and is supervised by an insolvency practitioner.
A CVA is not right for every case. It usually works best where:
- the business still has a realistic future
- directors can produce credible forecasts
- creditors are likely to receive a better outcome than immediate liquidation
If the business is no longer viable, liquidation or administration may be more appropriate.
Why this matters for directors
A CVA can preserve the business, protect jobs, and avoid an immediate shutdown. But it also requires realism and discipline.
This matters because:
- directors need accurate forecasts and a workable proposal
- missed payments under a CVA can lead to failure of the arrangement
- creditors may support it only if the alternative is worse
- continuing to trade still requires careful attention to creditor interests
A CVA is a restructuring tool, not a way to postpone the inevitable.
What to check now
Directors should review:
- whether the business is fundamentally viable
- whether cash flow can support CVA payments
- whether key creditors are likely to engage
- whether tax arrears, rent, or trade debt can be managed within a proposal
- whether administration or liquidation would deliver a better result
What usually happens next
The process usually looks like this:
-
Initial viability review
Directors and an insolvency practitioner assess whether a CVA is realistic. -
Proposal to creditors
A formal repayment proposal is prepared and put forward. -
Approval and supervision
If approved, the arrangement is supervised over time.
If the proposal is not viable or not approved, a different insolvency route is usually needed.