Company voluntary arrangements

General

The applicable legislation is the Insolvency Act 1986 (IA 1986) and the Insolvency (England and Wales) Rules 2016 (IR 2016), SI 2016/1024.

A company voluntary arrangement (CVA) is a contractual agreement between a company and its creditors and is the corporate equivalent of individual voluntary arrangements (IVAs) for individuals (see Practice Note: Company voluntary arrangements—an introductory guide). The main benefits of CVAs include:

1. •

   there's no need to prove insolvency, so action can be taken early at the first signs of distress

2. •

   dissenting unsecured creditors can be crammed down if the CVA is approved by 75% in value of creditors present in person or by proxy and voting on the proposal (and not opposed by more than 50% of independent creditors ie those who are not associates). The CVA proposal will even bind creditors who are unaware of the CVA proposal/creditors' decision procedures

However, the main limitation is the lack of any automatic moratorium (the small companies moratorium was abolished by CIGA 2020). Accordingly, CVAs are sometimes combined with administrations to benefit from the moratorium arising under administration or could ...