CVA – What is a company voluntary arrangement?

A corporate voluntary arrangement (CVA) is a way of dealing with corporate debts that you cannot pay when they become due.

A corporate voluntary arrangement is when your company makes an agreement with its creditors by proposing an arrangement by which to settle its debts which has been approved by the court. In a corporate voluntary arrangement, your company has formally agreed terms with its creditors on how to settle its debts.

These agreements are also known as a “composition in satisfaction of its debt” and a “scheme of arrangement of its affairs”.

A corporate voluntary arrangement may be proposed by:

• the administrator (if the company has going into administration)
• the liquidator (if the company is being liquidated)
• the directors.

Creditors vote on whether a company voluntary arrangement is to be considered. If a majority (in excess of three-quarters in value of the debt) of creditors accept the proposal, all creditors are bound by the arrangement.

A corporate voluntary arrangement must be supervised by an insolvency practitioner.

Once your company is bound by a company voluntary arrangement, its creditors cannot take any fur ther action against you, unless your company fails to fulfil the terms of the arrangement.

More information

• CVA – The company voluntary arrangement process
• 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
• What is bankruptcy?
• What is liquidation?
• What is administration?
• What is an individual voluntary arrangement?