CVA – The company voluntary arrangement process

If the directors of a business propose a company voluntary arrangement, they need to appoint an Insolvency Practitioner to supervise the implementation of the arrangement.

Insolvency Practitioner’s duties

The Insolvency Practitioner takes on the roles of nominee, mediator and supervisor during different stages of the company voluntary arrangement process.

• As nominee, they must establish that the company is proposing a viable arrangement and report to the court within 28 days of being appointed to state that a meeting of the creditors is being held.
• As mediator, they hold a meeting between the company and its creditors, where the creditors vote whether or not to approve the arrangement.
• If the arrangement is approved, as supervisor, they must send a copy of the chairman’s report of the company and creditors meeting to Companies House.
• Every 12 months, the they must also send an account of receipts and payments, together with a progress report, to all creditors and the Registrar of Companies House.
• When the arrangement is completed, they must notify the Registrar within 28 days after final completion.
• They must also notify the Registrar if the arrangement has failed, for example, if the company miss a creditor payment.

Moratorium

Some small companies qualify for a moratorium when the company voluntary arrangement is first proposed. The moratorium prevents creditors taking any further action while the directors to put their company voluntary arrangement proposal together.

To quality for a moratorium, your company must fulfil two of the following conditions:

• Have a turnover less than £5.6 million
• Have a balance sheet total less than £2.8 million
• Having fewer than 50 employees

During the administration process

• You must make all payments agreed by the company voluntary arrangement.
• Proposed payment plans can allocate payments for up to a five year period. The payment period may be shorter than five years, but not longer than five years.

Ending the administration process

The arrangement ends either when it is completed or when it has failed, for example, if the company miss a creditor payment. In both cases the Insolvency Practitioner notifies the Registrar at Companies House.

More information

• CVA – What is a company voluntary arrangement?
• CVA – Who needs a company voluntary arrangement?
• CVA – When to apply for a company voluntary arrangement
• CVA – How to apply for a company voluntary arrangement
• CVA – The advantages of company voluntary arrangements
• CVA – The disadvantages of company voluntary arrangements
• CVA – Insolvency and company voluntary arrangements