What is a Company Voluntary Arrangement?

A CVA is a legally binding contract (put together by an Insolvency Practitioner at Lucas Johnson) between a company and its creditors, to give the company breathing space to repay its debts over a period of up to 5 years.

You repay as much as you can afford to pay over the period of the Company Voluntary Arrangement – this can be anything from a very small percentage to 100% based upon what you can afford. It includes all your unsecured creditors (trade, tax, tribunal claims, utilities, unsecured loans, rates) and your secured creditors if they agree.

With a CVA you are able to get your business out of an insolvent situation and rebuild your company, grow sales and profits, whilst remaining in complete control and avoiding personal guarantees being called in.

What are the benefits of a CVA?

How a CVA benefits you and your company will vary depending on your circumstances but you can expect the following:

  • Spread debt repayments out over 60 months
  • Pay only what you can afford
  • Possibility to write-off a large portion of debt
  • Stop your company going into liquidation
  • Stop pressure from creditors
  • Get your company out of insolvency
  • Unlikely personal guarantees will be called upon
  • Easy to manage single monthly payment

How long does a Company Voluntary Arrangement take?

After contacting us, the process begins the preparation of a proposal, which takes around 1 week. After this it must be sent to your creditors who are given at least 2 weeks to consider it before voting at a meeting. If all is ok, the CVA is then approved. Overall it can be done in as little as 3 weeks.

Will this stop creditors chasing me?

As soon as the proposal is prepared, we contact your creditors to let them know what is happening. This means they will stop chasing you and allow you to get on with running your business. We also spend time helping you ensure your business is saving costs where possible.

How is the CVA approved?

Your creditors vote and if 75% or more of those who vote approve the proposal, it gets immediately put in place. Creditors are likely to approve a CVA as the alternative may be putting your company into liquidation, administration or other creditors issuing a winding-up petition (preventing any debts from being collected). Even if they do not agree immediately, there are still other solutions.

How much does a CVA cost?

Costs are normally paid from the contributions you pay into the arrangement and vary depending on the size of your business, the length of time the CVA lasts for and the complexity. Contact us to discuss the costs appropriate to your position.

How is a CVA different to a CVL

A CVL is a process for companies which are coming to an end who cannot pay their debts in full. For more information, see our Creditors Voluntary Liquidation page or contact us to see which is more suitable for your situation.

How does it affect me personally?

As a director there is no personal impact on you or your credit rating, it is also unlikely personal guarantees will be called upon as the company’s debts will be settled via the CVA.

How do I arrange a CVA for my company?

Contact Lucus Johnson and we can help you find out if a CVA is the best solution for you (or if an alternative such as a pre-pack administration would be better) and what costs will be involved in your particular case. If you choose to use a CVA, your the worry of your debts could be behind you within 3 weeks.