Completion of a Company Voluntary Arrangement (CVA)

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Completion of Company Voluntary Arrangement (CVA): Key Insights into the Insolvency Procedure

The Completion of a Company Voluntary Arrangement (CVA) marks the successful conclusion of an agreed restructuring plan between a company and its creditors. A Company Voluntary Arrangement is a legally binding insolvency procedure that allows a financially distressed company to repay its debts over time while continuing to trade. Once the CVA is fully completed, the company is released from the terms of the arrangement and can move forward without the restrictions of the insolvency process.

What is a Company Voluntary Arrangement (CVA)?

A Company Voluntary Arrangement (CVA) is a formal insolvency mechanism under the Insolvency Act 1986. It allows a company to propose a repayment plan to its creditors, usually involving reduced payments over an extended period. The proposal must be approved by at least 75% (by value) of the creditors voting on it. Once approved, the CVA becomes legally binding on all creditors, including those who voted against it.

The purpose of the CVA is to enable the company to:

  • Continue trading while paying off its debts.
  • Avoid more drastic insolvency procedures such as administration or liquidation.
  • Reach an agreement that benefits both the company and its creditors.
What Does the Completion of a CVA Mean?

The completion of a Company Voluntary Arrangement signifies that the company has met all its obligations under the agreed terms of the CVA. This typically includes:

  • Making all required payments to creditors as outlined in the CVA.
  • Completing any other restructuring measures, such as the sale of assets or operational changes.
  • Satisfying any other conditions set out in the CVA.

Once the CVA is completed, the company is no longer subject to the restrictions of the arrangement, and the insolvency practitioner overseeing the CVA (the supervisor) will file a final report confirming that all terms have been fulfilled.

Benefits of Completing a CVA
  1. Debt Resolution: Completing the CVA allows the company to satisfy its obligations to creditors, usually at a reduced level, freeing it from unsustainable debts.
  2. Continued Trading: The company can continue operating throughout the CVA process, protecting jobs and preserving its business relationships.
  3. Avoiding Liquidation: Successful completion of the CVA helps the company avoid more severe insolvency procedures like liquidation, which could lead to the company’s closure.
What Happens After the Completion of a CVA?

Once the Company Voluntary Arrangement is fully implemented, the company is released from its debts and obligations under the CVA. The CVA supervisor will file a final report with the court and Companies House, marking the official end of the insolvency process.

For creditors, the completion of the CVA means that they have received payments as agreed under the terms of the arrangement, and they can no longer pursue the company for any additional amounts related to those debts.

For the company, completing the CVA provides a clean slate, allowing it to move forward without the burden of insolvency, although careful management will be required to ensure future financial stability.

Key Considerations for Creditors and Stakeholders

Creditors should closely monitor the CVA’s progress to ensure that payments are made in accordance with the agreed terms. Once the CVA is completed, creditors cannot pursue further claims for the debts included in the arrangement, so it’s essential to understand the outcome and what has been received.

For company directors, the successful completion of a CVA is an opportunity to rebuild the business and focus on future growth without the threat of liquidation or administration.

Useful Links for Further Reading:

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

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