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What is a Company Voluntary Arrangement – “CVA”?
A CVA is a rescue option which incorporates a legally binding contract between a Company and its creditors.
A CVA clearly sets out the Company's proposals for repaying debts and usually involves an element of debt forgiveness from creditors, demonstrating that, while they may not be paid in full, by supporting the CVA, they will receive a better return than if the Company were to be put into liquidation.
How does a CVA work?
Because every Company is different, so too is every CVA; however, generally by entering into a CVA, creditors and the Company are bound together, allowing the Company breathing space to repay a proportion of its debt over time – typically 3 to 5 years. Once approved, the Company receives legal protection from further creditor action, allowing the business to continue trading while preserving jobs as it returns to profitability.
