Corporate Voluntary Arrangement

Corporate Voluntary Arrangement (CVA): A Summary

A Corporate Voluntary Arrangement (CVA) is a legally binding agreement between a company and its creditors to settle outstanding debts. It allows the company to continue trading while addressing its financial difficulties. A CVA is overseen by a Supervisor, who ensures the arrangement is implemented as agreed.

Who Can Propose a CVA?

A CVA can be proposed by:

• An Administrator: If the company is under administration.
• A Liquidator: If the company is being wound up.
• Directors: Under certain circumstances, directors can propose a CVA.

Once proposed, a Nominee (usually a licensed insolvency practitioner) is appointed to review the proposal. The nominee has 28 days to report to the court on whether the company should proceed to a creditors’ meeting to discuss the CVA.

Approval Process

The approval process involves:

• Creditors’ Meeting: Organised by the Nominee, this meeting allows creditors to discuss and vote on the CVA proposal.
  • Creditors must be given adequate notice to attend.
  • 75% of voting creditors (by debt value) must approve the arrangement for it to be binding.
• Implementation: Once approved, the CVA becomes binding on all creditors who had notice of the meeting, whether they attended or not. The Supervisor, either the Nominee or a replacement, oversees the arrangement.

Reporting to Companies House

The Supervisor has specific reporting duties:

• Annual Reports: Every 12 months, the Supervisor must submit a progress report to Companies House, outlining the CVA’s status and prospects.
• Completion or Termination: The Supervisor must notify Companies House within 28 days of the CVA’s completion, suspension, or revocation.

The Moratorium

A moratorium is a temporary legal protection available to companies entering into a CVA under the Insolvency Act 2000:

• It provides a 28-day period during which creditors cannot take legal action against the company.
• At least 75% of creditors must agree to the moratorium.
• The court must approve the moratorium, which is managed by the Nominee.
• At the end of the moratorium, the company may proceed with the CVA or explore other options.

Useful Links for Further Reading

• Insolvency Service: CVAs Explained This guide offers a practical overview of CVAs, including eligibility, process, and reporting requirements.
• Companies House: Filing Obligations for CVAs Provides information on filing CVA-related documents and meeting statutory obligations.
• Corporate Insolvency and Governance Act 2020 Details recent changes to insolvency law, including provisions for moratoriums and creditor arrangements.

For more detailed insights into company arrangements, explore our Business data product which provides extensive Company Data on all UK registered companies.