A guide for company directors
Company Voluntary Arrangements, and how they work
A CVA gives a viable company a structured way to deal with historic debt while continuing to trade, with its directors still in control. It is the most demanding of the rescue procedures, because it only works where the underlying business can genuinely support the arrangement — and where creditors, HMRC usually among them, can be persuaded of that. This guide explains how it is built, how it is approved, and where it goes wrong.
You do not need to know which restructuring or insolvency procedure is appropriate before speaking to us. Working that out — honestly, including when the answer is that a CVA will not work — is what the first conversation is for.
In short
A CVA is a formal, legally binding agreement between a company and its creditors, setting out how some or all of its existing debts will be dealt with — normally from future trading over an agreed period, a lump sum, asset realisations, or a combination. The proposal is prepared with a licensed insolvency practitioner acting initially as nominee; once approved, an insolvency practitioner acts as supervisor.
The company normally keeps trading and the directors normally stay in control of day-to-day management. Crucially, a CVA compromises the historic liabilities included in the arrangement. It does not excuse the company from paying its future trading costs and taxes — and a company that cannot pay those is not a CVA candidate.
Could a CVA work?
Almost everything turns on viability. The question is not how much debt can be compromised, but whether the business underneath the debt can trade profitably and sustain the payments proposed.
Potentially suitable where
- The underlying business is viable, or can be made viable through restructuring.
- It can trade profitably before CVA contributions.
- Forecasts support both ongoing liabilities and the proposed payments.
- The causes of the difficulty have been identified, and there is a credible plan to correct them.
- Management information and tax filings can be brought up to date.
- Key customers, suppliers or employees will continue to support the company where that is needed.
- Historic debt is what is holding an otherwise sound business back.
- The arrangement should give creditors a better result than the likely alternative.
- The directors are committed to transparency and ongoing compliance.
Probably not the right route where
- The business is still loss-making with no credible recovery plan.
- Forecasts are optimistic rather than evidenced.
- Ongoing taxes and trading costs cannot be paid.
- There is insufficient working capital, or no margin for normal volatility.
- Essential suppliers will not continue to support the company.
- The company depends on contracts likely to terminate.
- Management problems have not been addressed, or records are unreliable.
- The proposed return is no better than the likely alternative.
- Enforcement action is too advanced for a proposal alone to help.
A CVA must be built around a viable business — not around a payment figure chosen simply to make the proposal appear affordable.
Circumstances that commonly lead directors to consider a CVA include the loss of a major customer followed by recovery of the order book, a one-off bad debt, historic HMRC arrears, premises or contracts that can lawfully be restructured, temporary disruption followed by a credible return to profit, working-capital pressure created by rapid growth, or legacy debt after a genuine operational turnaround. None of these makes a CVA suitable on its own — each still has to survive the viability test. Where it does not, administration, refinancing, informal restructuring, an asset sale, a moratorium or a liquidation may be the better answer, and we will say so.
The CVA process, step by step
1
Confidential viability review
We review the financial position, the causes of distress, current trading, secured debt, creditor pressure, working-capital requirements and the alternatives. Free, and it commits you to nothing.
2
Board decision
The directors consider whether to develop a proposal and formally support proceeding. A CVA is a significant commitment of management time as well as money.
3
Information gathering
Complete details of assets, liabilities, creditors, employees, tax, security, contracts, litigation and connected-party transactions.
4
Forecasting and restructuring
Integrated profit-and-loss, cash-flow and balance-sheet forecasts, built on evidence rather than hope, and identification of the operational changes the business actually needs.
5
The proposed creditor return is calculated
What the company can realistically contribute, and how the proposed outcome compares with liquidation or administration. Creditors will make that comparison whether or not the proposal does.
6
The insolvency practitioner acts as nominee
The nominee considers whether the proposal has a reasonable prospect of being approved and implemented, and whether it should be put to creditors and members at all.
7
Proposal filed and circulated
The nominee follows the statutory procedure, reports to the court, and sends the proposal and voting information to creditors and members.
8
Creditors and shareholders decide
Creditors may approve, reject or propose modifications. Shareholders consider the proposal separately.
9
The CVA takes effect
If the required majorities approve it, the arrangement becomes effective and the nominee — or another insolvency practitioner — becomes supervisor.
10
The company continues trading
Directors retain day-to-day control, while the company complies with the proposal and pays its ongoing liabilities in full and on time.
11
Contributions and distributions
The company makes the agreed payments or asset realisations, and the supervisor distributes funds according to the proposal.
12
Completion, variation or failure
If all obligations are met, the supervisor completes the CVA. If circumstances change, a variation may be proposed. If material breaches cannot be resolved, the arrangement may terminate.
One common misdescription worth correcting: a CVA is not “approved by the court”. The nominee reports to the court, but approval ordinarily comes through the creditor and member decision procedures.
A CVA proposal does not automatically freeze creditor action
This is the most damaging misunderstanding about CVAs, and it catches directors out repeatedly. Proposing a CVA does not, by itself, create a general moratorium. Before approval, creditors may still be able to continue debt recovery, present or pursue a winding-up petition, enforce security, terminate contracts where legally permitted, or take other legal action.
Where protection is genuinely needed while a proposal is prepared, it has to come from a separate route: a Part A1 moratorium, administration, a court application in relevant circumstances, or a consensual standstill agreed with key creditors. Which is appropriate depends on urgency, eligibility, funding and the creditor position — and it is one of the first things we assess.
The Part A1 moratorium, briefly
A Part A1 moratorium is a separate statutory process that may give an eligible company temporary protection while rescue or restructuring options are explored. Directors normally remain in control, and a licensed insolvency practitioner acts as monitor rather than taking over the company.
The initial period is normally 20 business days, and it may be extended through the applicable statutory procedures. Certain ongoing and moratorium debts must continue to be paid throughout, not every company is eligible, and the monitor must remain satisfied that rescue of the company as a going concern is likely — if that ceases to be the case, the moratorium ends.
A moratorium can support the preparation of a CVA, but it is not part of every CVA and it does not follow automatically from appointing a nominee. It is a distinct application with its own eligibility conditions, and it is a debt-protection tool rather than a debt compromise.
How a CVA is approved
The creditors' decision
A decision approving the proposal is made where three-quarters or more by value of those responding vote in favour.
There is then a second test. The proposal is not approved if more than half of the total value of the unconnected creditors votes against it.
The purpose of that safeguard is straightforward: connected creditors cannot be used to overwhelm opposition from independent ones.
The members' decision
Shareholders consider the proposal separately, and a simple majority is normally required.
Where the creditor and shareholder decisions conflict, the legislation provides a route for an application to court. In owner-managed companies this rarely arises in practice, since the shareholders and directors are usually the same people.
Three things the threshold is not
It is not 75% of creditors by number. It is not 75% of the company’s total debt. And it is not a vote of every creditor — only those who actually respond. All of which means that a small number of large, engaged creditors normally determine the outcome, and that is why the identity of your biggest creditors matters more than their number.
Which creditors are bound
An approved CVA normally binds unsecured creditors who were entitled to vote — including those who voted in favour, those who voted against, and those who did not vote at all. It may also bind a creditor who was entitled to vote but did not receive notice because their claim was not known at the time, although the precise treatment of an unknown creditor depends on the terms of the proposal and on applicable law.
It is not correct to say simply that “all creditors are bound”. Several categories sit outside or partly outside the arrangement:
- Secured creditors are not normally bound in relation to their security without their consent.
- Preferential creditors cannot normally have their priority altered without their consent.
- Post-approval debts are not automatically included, and normally must be paid in full as they fall due.
- Contingent and disputed claims are treated as the proposal provides — which is why the proposal must define clearly which claims are included and how such claims are valued.
- Creditors may still pursue debts falling outside the CVA, subject to any other legal restrictions.
How long it takes, and how long it lasts
Preparation is case-specific, and depends on the state of the records, whether accounts and returns are up to date, the complexity of the creditor position, the reliability of the forecasts, whether operational restructuring is needed, property leases and landlord claims, secured and preferential debt, employee liabilities, litigation or disputed claims, group balances, the urgency of any enforcement action, whether a separate moratorium or administration is required, and the negotiation of creditor modifications.
The statutory anchor is this: once a completed proposal has been received, a nominee who is not already the company’s administrator or liquidator must normally report to the court within 28 days. The proposal must then be circulated with the required notice and voting information. But the substantial work happens before the proposal is ready for that report — so the whole preparation-and-approval process ordinarily takes longer than 28 days, and we will not tell you otherwise.
| Stage | General timing |
|---|---|
| Initial viability assessment | Case-specific |
| Proposal preparation | Depends on records, forecasts and negotiations |
| Nominee’s formal report | Normally within 28 days after receiving the completed proposal |
| Creditor and member decisions | After the statutory proposal and notice process |
| CVA contributions | For the period specified in the approved proposal |
| Completion | After all obligations have been satisfied and closing reports filed |
Duration. There is no single statutory or universal CVA term. The duration is set by the approved proposal, and reflects the total contributions the company can afford, the debt included, expected creditor returns, planned asset disposals, seasonal trading, future investment requirements, creditor modifications, the treatment of secured and preferential claims, and the company’s risk profile. Contribution-based arrangements commonly run for several years, but the exact term is specific to the proposal.
A CVA may complete early where its terms permit and all obligations have been satisfied, be varied with the necessary creditor approval, be extended in accordance with its terms or an approved variation, or terminate early if the company materially breaches the arrangement.
What HMRC is likely to expect
In most CVAs HMRC is among the largest creditors, which often gives it decisive voting influence. It considers each proposal individually, and we cannot promise its support — but the expectations are reasonably consistent:
- Complete and honest financial disclosure.
- All tax returns up to date, with accurate VAT, PAYE and corporation tax information.
- A realistic and properly optimised offer — not the minimum the company thinks it can get away with.
- A credible explanation of what caused the arrears, and evidence that the underlying problem has been corrected.
- Payment of all future taxes in full and on time.
- Proper treatment of preferential tax debt.
- Transparent supervisor costs.
- A proposal that gives a better result than the likely alternative.
Historic tax liabilities may be included according to the proposal and applicable law. Taxes arising after the relevant cut-off must normally be paid in full on their usual due dates. Note also that corporation tax accounting-period dates can affect which liabilities fall inside or outside a proposal — that requires specific accounting and tax advice, and it is worth getting right early.
Who does what: nominee, supervisor, directors
The nominee (before approval)
Considers whether the proposal has a reasonable prospect of being approved and implemented, whether it should go to creditors and members at all, reports to the court, and circulates the proposal and voting information.
The supervisor (after approval)
Monitors compliance, receives contributions and asset realisations, adjudicates claims where required, distributes funds to creditors, reports to creditors and Companies House, and deals with breaches and variations under the terms of the proposal. The supervisor does not run the company.
The directors remain responsible for day-to-day management, trading decisions, employees, customers and suppliers, Companies House filings, tax returns, paying post-CVA liabilities, maintaining proper records, complying with the proposal, and providing information to the supervisor. Directors’ statutory duties continue in full throughout a CVA — it is not cover for irresponsible trading, and the fact that an arrangement is in place does not lower the standard expected of the board.
How contributions are calculated
Contributions must be built from evidence, not from a convenient round figure. The calculation has to work through sustainable operating profit, working-capital needs, corporation tax, VAT, PAYE and National Insurance, wages and pension costs, rent and property costs, finance payments, capital expenditure, seasonal fluctuations, contingency reserves, planned asset disposals, secured and preferential creditor payments, the supervisor’s fees and expenses, and the likely return in the relevant alternative procedure.
The balance a proposal has to strike
Creditors should receive the best achievable offer, and the company must retain enough working capital to keep trading. Contributions that are too low will not be accepted. Contributions that are too high will cause the CVA to fail — and a failed CVA leaves creditors worse off than a realistic proposal would have, which is why we would rather argue for a lower figure that holds than an optimistic one that does not.
Does a CVA write off debt?
A CVA may compromise part of the included debt, but only according to its approved terms. Some proposals repay debts in full over time; others provide an agreed dividend from contributions or asset realisations. Any unpaid balance is dealt with only as the approved proposal provides.
Debt is not simply erased when the CVA begins. The company must complete its obligations before receiving the intended benefit, secured, preferential, guaranteed and post-CVA debts may be treated differently, and a failed CVA may leave creditors able to pursue outstanding balances. Anyone offering to “write off 90% of your debt” or let you “pay pennies in the pound and walk away” is describing something other than the procedure as it actually works.
Employees, suppliers, customers and landlords
Employees. A CVA is designed to let the company keep trading, so employment normally continues unless operational restructuring is required. Employees remain employed by the same company, and their normal wages and current employment obligations must continue to be met. Redundancies may still form part of a restructuring plan. Employee claims arising before the CVA may have preferential or unsecured status depending on their nature, and preferential rights cannot normally be altered without consent. Pension, consultation and employment-law duties continue. A CVA does not itself transfer employees to a new company — that is an administration sale, and a different thing entirely.
Suppliers and customers. The company continues as the same legal entity, so existing contracts normally remain with it, subject to their terms and to applicable insolvency legislation. In practice suppliers commonly change credit terms, and some will require payment on delivery or deposits. Supplies after approval must normally be paid for in full. Critical supplier support should be assessed before a proposal is launched, not after — and a CVA does not automatically restore credit insurance or supplier confidence, so directors need a realistic plan for trading without the credit terms they used to enjoy.
Landlords and leases. CVAs can address lease liabilities, but this is a complex and heavily litigated area. Rent arrears may be included according to the proposal, and future rent may be varied only where the proposal lawfully provides for it. Different premises may be treated differently where there is a proper commercial justification. Landlord claims for future rent, dilapidations and termination need careful calculation. A CVA cannot simply confiscate proprietary rights; landlords may vote; and a proposal can be challenged for unfair prejudice or material irregularity. Retail-CVA templates should not be copied across to other sectors, and recent case law needs to be considered on each proposal.
Secured lending and personal guarantees
A CVA does not normally alter a secured creditor’s rights without consent. Banks and asset-based lenders may continue to exercise their contractual and security rights, existing facilities may be reviewed, and the company may well need secured-lender support for the arrangement to be workable at all. Ongoing finance costs must be built into the forecasts, and security documents and any intercreditor arrangements need reviewing before a proposal is finalised.
Separately, and importantly: a company CVA does not automatically release a director or shareholder from a personal guarantee. Whether a lender pursues a guarantee depends on the guarantee’s terms, the events of default, recoveries from the company, any security held, and any standstill or settlement negotiated. If you have given guarantees, they need to be on the table at the first conversation, because they may change which procedure makes sense for you personally as against the company.
Modifications and challenges
Creditors can change the proposal. Modifications may be proposed as part of the decision process, and commonly relate to contribution levels, duration, asset sales, reporting, director remuneration, connected-party claims, future tax compliance, supervisor powers, breach provisions, windfall or additional-profit contributions, or restrictions on dividends and new borrowing. The directors must then decide whether the company can accept and comply with them. A company should not accept modifications that make the arrangement unworkable merely to secure approval — that is how a CVA is approved and then fails six months later.
An approved CVA can be challenged. An eligible creditor, member or other entitled person may apply to court on grounds including unfair prejudice, or material irregularity in relation to the decision process. Strict time limits apply — generally 28 days from the relevant filing or notification date, subject to the rules for creditors who did not receive notice. If a challenge is contemplated, or threatened, take legal advice immediately rather than waiting.
When performance changes
If trading improves
- Additional contributions may be required.
- Profit-sharing or windfall provisions may apply.
- The company may be able to complete early where the proposal permits.
- Creditors may receive a higher dividend than originally projected.
If trading deteriorates
- Tell the supervisor promptly — this matters more than anything else on this list.
- A short payment deferral may be available under the proposal.
- A formal variation may be required.
- Additional funding or further restructuring may be needed.
- The CVA may fail if it is no longer viable.
The proposal should say how material changes are handled. A supervisor cannot unilaterally rewrite the arrangement — variations need the appropriate creditor approval.
Missed payments, failure, and completion
A missed payment is dealt with as the approved terms provide. The supervisor may issue a breach notice, require the missed contribution to be paid, allow a remedy period where authorised, seek a variation from creditors, terminate the CVA, or petition for liquidation or take other authorised action. One temporary difficulty does not necessarily cause immediate failure — but repeated or unremedied breaches make continuation impossible, and early communication is the single most useful thing a director can do.
If a CVA fails, creditors may regain the right to pursue outstanding debts, and interest or charges may become relevant under the proposal’s terms. The likely outcomes include a winding-up petition, a creditors’ voluntary liquidation, administration, or enforcement by secured creditors, alongside the practical loss of supplier support and a question over whether the company should continue trading at all. Money already paid into the CVA is not necessarily returned to the company: funds may already have been applied to costs and creditor distributions in accordance with the arrangement. A failure does not automatically make directors personally liable, but personal guarantees and director conduct remain separate questions.
Completion occurs once the company has met all the obligations required by the proposal. The supervisor will normally verify that the required contributions and asset realisations have been received, make final creditor distributions, issue the applicable completion notice or certificate, report completion to creditors, and file the required notice and report with Companies House within the statutory period. Debts are compromised or released only as the completed arrangement provides. The company then continues trading outside the CVA unless the shareholders later decide otherwise.
What a CVA costs
There is no universal CVA fee. Costs typically comprise the nominee’s fee for assessing and preparing the proposal, any legal, valuation or specialist costs, the supervisor’s fees for administering the arrangement, the costs of creditor decisions and reporting, and the costs of any variations or complex claims. The amount depends on the company’s size and complexity, the quality of its records, the number and type of creditors, property and lease issues, HMRC liabilities, connected-party claims, forecast preparation, the duration of the arrangement, any asset sales, and the monitoring and reporting required.
Costs must be set out transparently in the proposal, and creditors may approve or modify the proposed fee basis. They are normally paid through the arrangement according to its terms, and the effect of costs on creditor returns has to be shown clearly — creditors are entitled to see what they are actually receiving after costs, and a proposal that obscures this deserves to fail.
A CVA compared with the alternatives
| Option | How it differs from a CVA |
|---|---|
| Informal creditor agreement | May work where a small number of creditors will co-operate. Cheaper and quicker, but binds nobody who does not agree, and one dissenting creditor can undo it. |
| HMRC Time to Pay | Concerns tax debt only and binds no other creditor. Where tax is genuinely the only problem and a realistic instalment plan is achievable, it is usually the better and far cheaper answer. |
| Part A1 moratorium | Provides temporary protection while options are explored, but is not itself a debt compromise. Often used alongside, rather than instead of, a CVA. |
| Administration | Transfers control to an administrator and provides a wider statutory moratorium. More expensive and more disruptive, but far stronger protection — and an administration can exit into a CVA. |
| Creditors’ Voluntary Liquidation | Closes and winds up an insolvent company. The right answer where the business is not viable — and materially cheaper than a CVA that was never going to work. |
| Refinancing or new investment | May solve a funding problem without any formal procedure, but is not appropriate where the company cannot sustainably service the new borrowing. Refinancing a viability problem makes it worse. |
What we will need
Incomplete records should not stop you making an initial call. But reliable information will be essential before a proposal can responsibly be recommended — a CVA built on unreliable numbers fails, and everyone is worse off for having tried.
- Latest statutory and management accounts
- Integrated cash-flow, profit-and-loss and balance-sheet forecasts
- Bank statements
- Complete creditor list
- Aged creditor and debtor reports
- HMRC liabilities and reference numbers
- Corporation tax, VAT and PAYE returns
- Employee and payroll information
- Asset schedule
- Finance agreements and security documents
- Personal guarantees
- Property leases
- Key customer and supplier contracts
- Litigation or disputed claims
- Any statutory demand or winding-up petition
- Director’s loan accounts
- Connected-party balances
- Historic and projected director remuneration
- Details of previous payment arrangements
- An explanation of what caused the financial difficulty
- The directors’ turnaround plan
- Short-term and long-term funding requirements
Is enforcement action already underway?
Where the company faces a statutory demand or winding-up petition, HMRC or secured-lender enforcement, a frozen or restricted bank facility, repossession of essential assets, termination of critical contracts, or an inability to meet payroll, the position needs looking at quickly — and remember that a CVA proposal does not automatically stop any of it. Separate protective steps may need to be considered alongside, or instead of, a proposal.
Prompt advice may preserve options. We cannot guarantee that proceedings can be stopped, and we will not pretend otherwise. Speak to us as soon as possible: 01472 250001.
Frequently asked questions
What is a Company Voluntary Arrangement?
A formal, legally binding agreement between a company and its creditors setting out how some or all of its existing debts will be dealt with — normally from future trading over an agreed period, a lump sum, asset realisations or a combination. The company continues trading and the directors normally stay in control.
Who can propose a CVA, and who prepares it?
The proposal comes from the company, and in practice is prepared by the directors working with a licensed insolvency practitioner acting as nominee. It is the directors’ proposal, not the nominee’s — a distinction that matters, because the directors are the ones who must deliver it.
Does the company have to be insolvent?
A CVA is generally used by a company that is insolvent or facing insolvency and needs to compromise historic debt. What matters more is the combination: insolvent on its current liabilities, but with a business underneath that can be made to work.
Can a CVA save a company?
It can, where the underlying business is genuinely viable and the arrangement is realistically affordable. It cannot rescue a business that does not work, and proposing one in those circumstances simply delays the outcome at the creditors’ expense. No adviser can guarantee approval or survival.
What is the difference between the nominee and the supervisor?
The nominee acts before approval: assessing whether the proposal has a reasonable prospect of being approved and implemented, reporting to the court and circulating the proposal. The supervisor acts after approval: monitoring compliance, receiving contributions, adjudicating claims, distributing funds and reporting. Often the same practitioner, but two distinct statutory roles.
What percentage of creditors must approve a CVA?
A decision approving the proposal is made where three-quarters or more by value of those responding vote in favour. It is measured by value, among those who actually respond — not by number of creditors, and not against the company’s total debt.
How does the unconnected-creditor test work?
Even where the three-quarters threshold is met, the proposal is not approved if more than half of the total value of the unconnected creditors votes against it. The effect is that connected creditors — directors, associates and connected companies — cannot be used to carry a proposal over the objections of independent creditors.
Do shareholders vote on a CVA?
Yes, separately from creditors, and a simple majority is normally required. Where the creditor and member decisions conflict, the legislation provides a route for an application to court. In owner-managed companies this rarely arises, since the same people usually hold both roles.
Which creditors are bound?
Normally the unsecured creditors who were entitled to vote — including those who voted for, against, or not at all, and potentially a creditor whose claim was not known at the time, depending on the proposal and applicable law. It is not true that “all creditors are bound”: secured and preferential creditors, post-approval debts and claims outside the arrangement are treated differently.
Are secured and preferential creditors bound?
Secured creditors are not normally bound in relation to their security without their consent, and preferential creditors cannot normally have their priority altered without consent. In practice this means a CVA usually needs the co-operation of any secured lender to be workable at all.
Can a winding-up petition continue while a CVA is proposed?
Proposing a CVA does not by itself stop a petition. Protection, if it is needed, must come from another route — a Part A1 moratorium, administration, a court application in relevant circumstances, or agreement with the petitioning creditor. Where a petition has been presented, call promptly: the available options narrow as matters progress.
Do directors remain in control, and can the company keep trading?
Yes to both — that is the principal attraction of a CVA. Directors retain day-to-day management and the company continues trading, while complying with the proposal and paying ongoing liabilities in full. Directors’ statutory duties continue unchanged, and the supervisor does not run the business.
How are contributions calculated?
From evidenced forecasts, not a round figure. The calculation works through sustainable operating profit, working capital, all ongoing taxes, wages and pensions, property and finance costs, capital expenditure, seasonality, a contingency reserve, planned disposals, secured and preferential payments, the supervisor’s costs, and the likely return in the alternative procedure.
Does a CVA write off company debt?
It may compromise part of the included debt, but only as the approved terms provide, and only once the company has completed its obligations. Some proposals repay in full over time. Debt is not erased at the start, and a failed CVA may leave creditors able to pursue what remains.
Can HMRC debt be included, and will HMRC support it?
Historic tax liabilities may be included according to the proposal and applicable law. HMRC considers each proposal individually and nobody can promise its support. Outstanding returns, unevidenced forecasts, an offer that is not properly optimised, or doubt about paying future taxes all make support less likely.
Must future taxes be paid in full?
Yes. A CVA deals with historic liabilities included in the arrangement; taxes arising after the relevant cut-off must normally be paid in full on their usual due dates. A company that cannot do that is not a CVA candidate. Corporation tax accounting-period dates can affect which liabilities fall inside or outside the proposal, and need specific advice.
What happens to employees?
Employment normally continues with the same company, and current wages and employment obligations must continue to be met. Redundancies may still form part of a restructuring. Pre-CVA employee claims may be preferential or unsecured depending on their nature, and preferential rights cannot normally be altered without consent. A CVA does not transfer employees to a new company.
What happens to suppliers?
Existing contracts normally remain with the company, subject to their terms and applicable legislation, but in practice credit terms often tighten and some suppliers will want payment on delivery or deposits. Supplies after approval must normally be paid for in full. Critical supplier support should be assessed before a proposal is launched.
What happens to landlords and leases?
Rent arrears may be included according to the proposal, and future rent varied only where the proposal lawfully provides for it. Different premises may be treated differently with proper commercial justification. Claims for future rent, dilapidations and termination need careful calculation, landlords may vote, and a proposal can be challenged for unfair prejudice or material irregularity. A complex and heavily litigated area.
Does a CVA affect personal guarantees?
A company CVA does not automatically release a director or shareholder from a personal guarantee. Whether a lender pursues it depends on the guarantee terms, events of default, recoveries from the company, any security held, and any standstill or settlement negotiated. Take specific advice before agreeing anything.
Can creditors change the proposal?
Yes — creditors may propose modifications on contribution levels, duration, asset sales, reporting, director remuneration, connected-party claims, future tax compliance, supervisor powers, breach provisions, windfall contributions, or restrictions on dividends and borrowing. The directors must decide whether the company can accept and comply with them, and should not accept terms that make the arrangement unworkable simply to get it approved.
Can an approved CVA be challenged?
An eligible creditor, member or other entitled person may apply to court on grounds including unfair prejudice or material irregularity in relation to the decision process. Strict time limits apply — generally 28 days from the relevant filing or notification date, subject to the rules for creditors who did not receive notice. Take legal advice immediately if a challenge is contemplated.
What happens if the company misses a payment?
It depends on the approved terms. The supervisor may issue a breach notice, require the contribution to be made good, allow a remedy period where authorised, seek a variation, terminate the arrangement, or petition for liquidation. Tell the supervisor early — one temporary difficulty is survivable; silence usually is not.
Can a CVA be varied, or finish early?
Both are possible. A variation requires the appropriate creditor approval — a supervisor cannot rewrite the arrangement unilaterally. Early completion is possible where the proposal permits it and all required obligations have been satisfied, which sometimes happens where trading has outperformed the forecasts.
What happens if a CVA fails?
Creditors may regain the right to pursue outstanding debts, and the likely outcomes include a winding-up petition, a creditors’ voluntary liquidation, administration or enforcement by secured creditors. Money already paid in is not necessarily returned — it may already have gone to costs and creditor distributions. Failure does not automatically make directors personally liable, but guarantees and conduct remain separate questions.
How does a successful CVA end?
Once all obligations under the proposal have been met, the supervisor verifies the contributions and realisations received, makes final distributions, issues the applicable completion notice or certificate, reports to creditors, and files the required notice and report with Companies House. Debts are compromised or released only as the completed arrangement provides, and the company then trades on outside the CVA.
Does a CVA appear at Companies House?
Yes. A CVA is a matter of public record, and documents relating to it are filed at Companies House. Customers, suppliers and credit reference agencies may become aware of it, which is one reason communication with key relationships should be planned before the proposal is launched rather than after.
What is the difference between a CVA and administration?
In a CVA the directors stay in control and the company keeps trading under a binding arrangement, but there is no automatic moratorium. In administration an administrator takes control and a wider statutory moratorium applies. Administration offers much stronger protection at greater cost and disruption — and can itself exit into a CVA.
What is the difference between a CVA and liquidation?
A CVA is a rescue procedure: the company survives and pays creditors under an arrangement. A creditors’ voluntary liquidation closes the company and realises its assets. Where the business is not viable, a CVL is the honest answer and considerably cheaper than a CVA that was never going to work.
What is the difference between a CVA and HMRC Time to Pay?
Time to Pay is an instalment arrangement with HMRC covering tax debt only; it binds no other creditor and involves no formal procedure or cost. A CVA is a statutory arrangement that, once approved, binds unsecured creditors generally. Where tax really is the only problem, Time to Pay is usually the better route.
What does a CVA cost?
There is no universal fee. Costs typically comprise the nominee’s fee for preparing and assessing the proposal, any legal or valuation work, the supervisor’s fees for administering the arrangement, and the costs of creditor decisions and reporting. They depend on size and complexity, records, creditor numbers and types, property issues, HMRC liabilities, connected-party claims, forecasting and duration. Costs must be set out transparently in the proposal, creditors may approve or modify the fee basis, and the effect on creditor returns must be shown clearly.
Next step
A successful CVA must do more than reduce historic debt.
It must give a fundamentally viable company a realistic way to meet its ongoing obligations and rebuild creditor confidence. We will assess honestly whether yours is that company — and tell you plainly if another route would serve you better. Your initial consultation is free and confidential.
01472 250001 · enquiries@crginsolvency.co.uk
CRG Financial Recovery. Company number 04948177. Licensed insolvency practitioners, regulated by the Insolvency Practitioners Association. Members of R3. This guide describes the position for companies registered in England and Wales; procedures differ in Scotland and Northern Ireland and separate advice may be required. It is general information, not personalised insolvency, legal, tax or financial advice, and no guarantee is given as to creditor or HMRC approval, any particular reduction in debt or contribution level, continued supplier support, protection from creditor action, completion of a CVA or survival of a company. Legal and procedural content reviewed 21 August 2026 against GOV.UK guidance on Company Voluntary Arrangements and moratoriums, HMRC guidance on voluntary arrangements, the Insolvency Act 1986 (Part I and Part A1) and the Insolvency (England and Wales) Rules 2016 (including rule 15.34). Voting thresholds, binding effects, challenge periods, nominee-report deadlines, creditor classifications, moratorium provisions and HMRC requirements should be re-verified before reliance.
Related
The Company Voluntary Arrangement page
This guide sits alongside our main page on the subject, which covers the same ground more briefly and links to the rest of the site.
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