Company Voluntary Arrangement (CVA)

A Company Voluntary Arrangement (or CVA) is a procedure whereby a company can continue to trade even though it is insolvent – in other words, by Insolvent I mean there is insufficient cash flow being generated by the business to pay its ongoing liabilities.

A CVA is to be used (rather than a Creditors Voluntary Liquidation (CVL)) if the company has already or is likely to return to profitability in the near future and debts can be paid off over an extended period of time. The CVA is a tailored plan to repay to creditors, usually over a 3 year period, what the company can afford to pay.

It should be possible to identify the reasons why the company has got into difficulties and how these problems do not recur in the future.


How we can help you with the Company Voluntary Arrangement (CVA) process

A Company Voluntary Arrangement (CVA) is sometimes used if there is good reason to wish to keep the company trading, such as licence agreements or other contractual agreements that could not be transferred to a different company. We would carry out a full review of the trading position of the company and assess the future trading position. During this review process decisions can be made about any redundancies or other cost cutting steps.

Based on this realistic assessment of the viability of the company we would agree with you the plan that the company could afford to put forward to creditors. This is called the ‘offer to creditors’ or more formally ‘the Proposals’. In practice, the amount repaid is likely to be less than 100% and may be as low as 25 to 40%.

As part of our work we will speak to your bankers, the taxman and any major supplier to explain the plan in more detail and get their support. These are delicate negotiations and not all Insolvency Practitioners have the experience or expertise to do this.

Once the detailed report of the financial position of the company has been prepared and the Proposals completed, we will be appointed as Nominee and prepare a Report on the viability and prospects of full implementation of the Company Voluntary Arrangement (CVA). The Proposals and Nominee’s Report are both filed in Court and are now ready to be considered by creditors.

Under new insolvency Rules introduced in April 2017, a physical meeting of creditors can only be held at the request of the requisite number/value of creditors. Therefore, the decision from creditors will be sought at a virtual meeting.

A virtual creditors meeting will normally take the form of a conference call, at which at least one Director must participate, to answer any questions from creditors about the running and management of the business, and of its financial affairs or the implementation of the CVA and the proposed dividend. As creditors may also vote by proxy, it is often the situation that no creditors attend the virtual meeting and it is merely a formality. The decision on the approval of the arrangement (and modifications) and the appointment of the Supervisor is made at the meeting.

However, if before the virtual meeting has taken place, the requisite number/value of creditors were to object, then no decision is made and we must convene a physical meeting of creditors (see below).

Where physical meeting becomes necessary, this will be held at our offices where possible. At least one Director must attend in person to answer any questions (as stated above). Creditors may vote by proxy and the decision on the approval of the arrangement (and modifications) and the appointment of the Supervisor is made at the meeting.

The requisite majority for approval of the CVA is achieved when 75% of the value of creditors voting (in person or by proxy), vote in favour of the Proposals and any modification thereto. Members of the company must also approve the Proposals and any modifications. The CVA becomes a binding agreement between the Company and its creditors.

In practice, so long as the Proposals and offer to creditors has been well thought through it is likely that the creditors will agree.

Up to the point of agreement by the creditors I am referred to as the Nominee and after the creditors meeting I am the Supervisor.

We will make sure that these things happen as quickly as possible, as time in these circumstances is often of the essence. It will usually take about 14 days from your initial meeting with us to the finalisation of the Proposals. There needs to be a further 14 days’ notice given to the creditors of the proposed decision – so it could take as little as 28 days from your first meeting with us to have a fully agreed CVA.

Simply comply with the terms of your Company Voluntary Arrangement (CVA) for the agreed period of time, and your insolvent position is managed and dealt with.


Griffin and King Licensed Insolvency Practitioners.