company voluntary arrangement
A company voluntary arrangement, often referred to as a CVA, allows the directors of a company to put forward a proposal to the company and its creditors.
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The purpose of the proposal is to seek agreement with the company’s creditors for them to accept a certain sum of money, over an agreed period of time, in full and final settlement of the debts due to them.
The proposal will be considered by both the company and its creditors at meetings convened for that purpose. The procedure is extremely flexible and the form which the CVA takes will depend on the terms of the proposal agreed by the company and its creditors. Typically, creditors will expect the company to make monthly contributions of any agreed amount or for it to realise certain assets (or a combination of both) and in return creditors agree to ‘write off’ a proportion of the debt due.
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