How to start a Company Voluntary Arrangement

There are various steps required to start a Company Voluntary Arrangement (CVA). It will normally take 6-12 weeks to put in place. However the actual time scales will vary depending on the nature of the company.

  • Understand what you will have to do to start a CVA
  • Do all of company creditors have to accept the Arrangement?
  • What happens if the company starts a CVA but then cannot pay it?

Implement Company Voluntary Arrangement

Company Debt Expert James Falla describes the process of implementing a Company Voluntary Arrangement (CVA). For more business debt advice visit

Do you want help to start a CVA? Give us a call (0800 180 8440) or complete the form below to speak to one of our experts

Decision to start a CVA taken

Before the decision to start a Company Voluntary Arrangement can be taken the directors must review company’s financial position. A full list of the company’s creditors must be produced. In addition accurate cash flow forecasts will have to be generated. Statutory accounts may also have to be brought up to date.

This information is used to assess how much the company can afford to repay to its creditors and when these payments will be made. The way the company will be managed and resourced going forward will also have to be considered.

The Directors must then hold a special meeting of the Board to formally agree to move forward with a CVA. An Insolvency Practitioner must then be appointed.

Insolvency Practitioner Appointed

In order to start a Company Voluntary Arrangement the Directors need to the help of a licensed Insolvency Practitioner (IP). This person is legally qualified to propose the Arrangement to the creditors. The IP will also supervise the Arrangement once it is accepted.

The Insolvency Practitioner will normally speak to any major creditors to assess their willingness to agree to a CVA. They may also decide to apply to the court for an Interim Order. This prevents any further action being taken against the company by its creditors for a period of 28 days. It allows time for the proposal to be drafted and a creditors meeting to be called.

At this stage the company will normally stop paying most or all of its unsecured debts including HMRC. This can provide a very significant cash boost to the company. However if any creditors are vital to the company’s survival such as key suppliers payments to them can be maintained.

CVA Proposal Drafted

Once all the necessary financial information about the company has been gathered the IP will draft the CVA proposal.

This document includes a summary of the company’s current trading position and cash flow forecasts. It will also included a statement detailing how much the company intends to repay to its creditors and when these payments will be made. There will also be a comparison to what the creditors might be likely to receive if the company was liquidated.

Once drafted the directors have to sign off the proposal. A copy is then forwarded to all known creditors and other interested parties. Normally creditors are then given 21 days to review it.

Creditors Meeting Held

After 21 days a Creditors Meeting is held. At this meeting the creditors will be asked to vote for or against the acceptance of the Company Voluntary Arrangement. They may attend the meeting in person or send written confirmation of their vote to the IP beforehand.

In order for the Arrangement to be accepted 75% of the value of the creditors who decide to vote must agree. It may be approved with or without modifications. If there are modifications the IP will confirm with the Directors whether they are in agreement to these. Once approved Arrangement binds all included creditors to its terms irrespective how they voted.

The company Director or Directors will normally attend the Creditors Meeting in person. The meeting will be chaired by the Insolvency Practitioner.

Terms of CVA Maintained

Once the CVA is accepted the company has a responsibility to maintain the payments to creditors as agreed. The Directors must ensure that the company is run efficiently so that these commitments are honoured.

As long as the payments are maintained once the Agreement is completed all outstanding debts will be written off. The business can then continue to trade debt free. However if the payments are not made the Arrangement could fail.

The Directors should consider how new ideas and energy might be brought into the company to ensure the CVA is successful. This does not necessarily mean there has to be a change of management. However at the very least it is sensible to consider the use of external business advisers or a non executive director.

What if the CVA payments cannot be maintained?

If a company starts a Company Voluntary Arrangement but then finds itself unable to maintain the agreed payments the directors must inform the Insolvency Practitioner immediately.

If the company circumstances have changed for the worse it may be possible to agree reduced payments with the creditors. However in return they may require the length of the Arrangement to be extended to ensure that they receive the same returns overall.

If the company is truly unable to continue making reasonable payments the IP may be forced to fail the Arrangement. The Directors would then have to seriously consider the option of closing the company.

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