Company Voluntary Arrangement
A company voluntary arrangement (CVA) enables the directors of a company to put forward a proposal to creditors, being an agreement in satisfaction of its debts.
The CVA proposal may involve delayed and/or reduced payments of debt, capital restructuring or an orderly disposal of assets. A meeting of creditors is convened for the company’s creditors to consider the CVA proposal. A CVA requires the approval of at least 75% by value of the creditors that vote. Once approved, it is legally binding on the company and all its creditors, whether or not they voted in favour of it.
A licensed insolvency practitioner acts first as Advisor, making sure a CVA is right for the company; secondly as Nominee to assist the directors to draft the CVA proposal, then as Supervisor once the CVA is approved.
Following approval the Supervisor administers the realisations, agrees creditors’ claims and makes distributions accordingly.
Similar to companies, partnerships can put forward a proposal to creditors to approve a partnership voluntary arrangement (PVA).