CVA’s now available for Industrial and Provident Societies

The incredibly valuable and underutilised recovery tool of a Company Voluntary Arrangement (“CVA”) has until recently not been available to Industrial and Provident Societies, which has seen many close their doors, sometimes prematurely, as no other option is available unless they convert to limited companies, but for some this is not always possible.

Industrial and Provident Societies are organisations conducting an industry, business or trade, either as a co-operative or for the benefit of the community, and are registered under the Industrial and Provident Societies Act 1965.

Industrial and Provident Societies cover a large variety of organisations including charities and most notably the Royal British Legion.

Legislation changes this year have allowed Industrial and Provident Societies to enter into Company Voluntary Arrangements.  Whilst not strictly a ‘company’ these organisations do have limited liability for participants.

Historically only dissolution or liquidation were available to an Insolvent Industrial and Provident Society, meaning there was not ability to rescue or restructure the organisation. The new provisions mean that these organisations can access the incredible useful recovery tool that we have been advising company directors for years can transform the financial fortunes of a business overnight.

  • They may provide a mechanism for the IPS to work through the rough times (maybe with the benefit of a voluntary arrangement or SoA).
  • Administration provides, arguably, a better chance of realising value from the insolvent business for creditors (compared to liquidation) which, in turn, may make creditors more willing to lend money to the IPS.
  • A moratorium can be claimed, both with a CVA and an administration, which provides a breathing space for taking stock and attempting to put rescue plans in place without the threat of creditors realising their security or petitioning for winding up. (NB: Credit unions and other authorised deposit takers will not be able to take advantage of the moratorium on a CVA.)

In simple terms a CVA is a binding contract between an organisation and its creditors acknowledging that it is in financial difficulty but providing a positive way out of its current situation to enable a much better financial outcome for all concerned than closing the doors.

A CVA can take as little as 3 weeks to put in place, but the speed depends on the circumstances of each organisation.  Once in place the organisation will continue more or less as it was without the threat of closure or other legal action from creditors.  It can provide the vital breathing space needed to turn around an organisation’s fortunes.

If you need advice about a CVA or the financial predicament of your Industrial and Provident Society, call us now on 0330 900 2000 or email

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