If your limited company is under pressure from creditors but the business still has a future, a Company Voluntary Arrangement (CVA) can give you breathing space and a clear plan to deal with historic debt.
A CVA is a formal, legally binding agreement between your company and its creditors. It is supervised by a licensed insolvency practitioner and typically allows your business to repay an agreed amount over time while continuing to trade.
This page explains what a CVA is, when it can work, and what the process involves, so you can decide whether it’s a realistic route for your business.
What Is a Company Voluntary Arrangement?
A Company Voluntary Arrangement (CVA) is a statutory rescue process designed to help a company in financial difficulty reach a binding compromise with creditors.
In practical terms, a CVA allows a company to:
- agree affordable repayments based on forecast trading
- repay creditors over time (often from future profits)
- keep trading under director control, with the arrangement supervised by an insolvency practitioner
CVA Explained in Plain English
A CVA is a “deal” with creditors that becomes legally binding once approved. The company proposes how much it can pay, and when, and creditors vote on whether to accept it.
If approved, the arrangement is supervised and creditors are expected to follow the agreed terms rather than taking individual enforcement action outside the process.
A CVA is only as strong as the cashflow behind it. It can be a strong option when the business is viable but needs time and structure to repay historic liabilities. However, it does not magically fix an unviable business model. If the business cannot generate enough cash to meet ongoing costs and CVA contributions, the arrangement is unlikely to succeed.
You can get more details in our voluntary arrangements guide.
Get a confidential view on whether a CVA is viable for your business. Contact Anderson Brookes now on 0800 1804 935 or by emailing advice@andersonbrookes.co.uk. We can help you to deal with business debt and navigate insolvency with confidence.
When Is a CVA the Right Option?
A CVA generally works best when the company can still trade profitably going forward, but is being dragged down by arrears, legacy debt, or short-term creditor pressure.
The “Viable Business” Test
A CVA is usually suitable where:
- the core business is sound
- there is a realistic forecast showing the company can meet contributions
- the business can stay compliant going forward (taxes, rent, wages, key suppliers)
If the business is no longer viable, it may be more responsible to explore formal closure options instead.
A CVA can work if…
- creditor pressure is increasing but the company still has steady sales
- HMRC arrears have built up and need a structured repayment plan
- cashflow issues mean the business needs time to catch up
- the company needs a formal process that treats creditors consistently
Meanwhile, a CVA is unlikely to succeed if…
- losses are increasing and there’s no realistic route back to profitability
- the company cannot keep up with future liabilities as they fall due
- the proposal depends on best-case assumptions rather than conservative forecasts
- creditor support is unlikely (for example, where the largest creditors are expected to vote against)
In situations like this, a CVL may be a better choice.
How the CVA Process Works
A CVA is formal, but it is also flexible. The aim is to create a repayment plan creditors will accept and your business can actually maintain while continuing to trade.
1
Viability Review and Creditor Strategy
Before anything is drafted, the first job is to confirm the business is viable and that a CVA is realistic.
This usually involves reviewing:
- trading performance and forecasts
- cashflow and working capital
- creditor balances (including HMRC)
- any key contracts, leases, or supplier dependencies
If it’s clear the business cannot generate enough cash to fund a CVA, it’s often better to consider liquidation advice early rather than pushing forward with an arrangement that’s unlikely to hold.
2
Drafting the Proposal and Forecast
The CVA proposal sets out:
- what the company can afford to pay
- how long payments will run for
- whether any assets will be realised
- how different creditor groups will be treated
The proposal needs to be credible. CVAs often fail where contribution levels are set too high, or where forecasts were based on overly optimistic assumptions.
3
Creditor Voting and Approval
Once the proposal is issued, creditors vote on whether to accept it. A CVA is approved if 75% of creditors by value vote in favour.
If approved, it becomes binding on creditors who were entitled to vote, even if some voted against.
This stage is where a lot of director anxiety sits, so it’s worth being clear: approval depends on whether creditors believe the CVA gives a better outcome than the alternatives.
4
Supervision and Ongoing Reporting
If approved, the CVA is supervised by an insolvency practitioner, and the company makes payments under the agreed terms (usually monthly).
Directors remain in day-to-day control, but the arrangement will require ongoing discipline:
- payments must be made on time
- new liabilities (including taxes) must be kept up to date
- reporting requirements must be met
Sectors We Support
We support company directors in every sector, from construction firms and logistics companies to pubs, cafés, restaurants, hotels, retailers and manufacturers. Our advice is always clear, confidential and shaped by real experience in your industry. Whether you’re dealing with unpaid tax, supplier pressure or falling income, our team understands the challenges and will guide you through the best next steps.
How Long Does a CVA Take?
Timescales vary depending on complexity, creditor makeup, and how quickly financial information can be pulled together. It’s also important to separate the time to get approval from the time the CVA runs for.
Time to Propose and Get a CVA Approved
A CVA can sometimes move quickly, but it’s rarely helpful to promise a single “standard” timeframe. The process involves preparing a workable proposal and giving creditors time to consider and vote.
The time to reach a vote depends on how complex the creditor position is and whether negotiations will be needed with key creditors. Also coming into play is whether your management information is ready.
Typical CVA Length
Most CVAs run for three to five years, because that’s often the period needed to make meaningful repayments while keeping the business stable.
What Can Speed Up or Delay a CVA?
A CVA may take longer to put in place if:
- the forecast needs work or trading performance is volatile
- HMRC and other key creditors require additional detail
- there are disputes about balances or claims
- there are property leases or complex contract issues to factor in
If time is tight because pressure is escalating, it may also be worth looking at the company liquidation process so you can compare realistic routes side-by-side.
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What Happens to Creditors, HMRC and Interest?
A CVA works because it replaces multiple separate creditor demands with one structured plan that treats creditors consistently.
What Creditors Can Do During a CVA
Once a CVA is approved, it becomes legally binding on creditors who were entitled to vote. In practice, that usually means creditors are expected to follow the terms of the arrangement rather than taking individual action outside it.
That said, a CVA is only effective if the company keeps to the agreed payments and stays compliant. If contributions are missed, creditors can push for the arrangement to be terminated and may restart enforcement action.
HMRC Considerations
Many directors explore a CVA because HMRC arrears have become unmanageable, but the core business is still trading.
A CVA can include HMRC as a creditor, and approval is based on creditor voting by value (75% of votes cast).
Where tax arrears are the main pressure point, a CVA can be possible, but HMRC will expect a credible forecast and ongoing compliance. Read our guidance on closing a limited company with HMRC debts to understand when a CVA is realistic and when another route may be more appropriate.
What Happens to Interest, Charges and Old Debts?
A CVA proposal will usually set out how historic debt is treated and what happens to any continuing charges. The key point for directors is that the arrangement must be affordable, credible, and acceptable to creditors. If it is, a CVA can give the company the breathing space to stabilise and trade forward.
Anderson Brookes’ licensed insolvency practitioners can walk you through the best ways to deal with existing arrears and creditor pressure.
What Happens to Directors and Trading?
Directors often like CVAs because the business can keep trading and directors remain in control. A CVA is supervised, but it is not the same as handing the company over to someone else.
Under a CVA, directors typically continue to run day-to-day operations. The insolvency practitioner acts as nominee during the proposal stage and then as supervisor once approved.
Cashflow Discipline and Compliance
A CVA will only succeed if the business can:
- meet ongoing costs as they fall due (wages, rent, suppliers)
- stay up to date with future tax liabilities
- make the agreed CVA contribution on time
Most CVAs fail because contributions were set too high or trading assumptions were unrealistic. A conservative forecast matters.
How a CVA Affects Suppliers, Credit and Reputation
A CVA can change how suppliers and lenders view the business. Some suppliers may tighten terms; others may continue as normal if payments are reliable and communication is clear.
This is one reason directors often want a quick, honest comparison of rescue versus closure options. If the business is no longer viable, the team at Anderson Brookes can help you to understand how to close your limited company the right way.
CVA Costs and Fees
Costs are an understandable concern. The important thing is that CVA fees should be clear, explained upfront, and proportionate to the work required.
Nominee Fee vs Supervisor Fee
Most CVAs involve two types of fees:
- Nominee fee: for the work involved in assessing viability, drafting the proposal, and convening the decision procedure
- Supervisor fee: for ongoing supervision once the CVA is approved, including reporting and administering distributions
The exact structure varies by case, but the principle is the same: fees reflect the work required to put the arrangement in place and keep it running properly.
How Fees Are Paid in Practice
CVA fees are commonly paid from contributions made under the arrangement, rather than as a large upfront payment. In other cases, a modest upfront payment may be needed to get the proposal prepared, especially where information needs work or urgency is high.
CVA vs Other Options: Which Route Fits?
A CVA can be a strong solution when the business has a future. If it doesn’t, a different route may be more appropriate. The key is choosing the option that fits your company’s reality, not the one that sounds best on paper.
CVA vs CVL
A CVA is designed to help a company keep trading while it repays historic debt over time. A CVL is designed to close an insolvent company in an orderly, compliant way.
If you’re confident the business can trade profitably going forward, a CVA may be worth exploring. If the business cannot consistently meet future liabilities and CVA contributions, it’s often safer to look at voluntary liquidation instead.
If you’re weighing these routes up, our overview of company liquidation options can help you compare outcomes more clearly.
CVA vs Administration
Administration is another formal process, but it is often used where the company needs immediate protection while a rescue, sale, or restructure is attempted.
If you want to understand the differences, our guide to putting a company into administration explains the process and what it means for directors.
CVA vs Informal Repayment Plans
Some businesses try to agree informal arrangements with creditors first. This can work in limited cases, but it can also fall apart quickly if:
- one creditor refuses to cooperate
- pressure escalates unexpectedly
- the company needs a single, consistent framework for all creditors
If you’re under pressure and want to understand all routes, speaking to our team can help you to understand your options.
Company Voluntary Arrangement FAQs
Is a CVA only for insolvent companies?
CVAs are typically used for companies that are insolvent or at serious risk of insolvency. The key issue is whether the business is viable and can meet the proposed contributions while staying compliant going forward.
How long does a CVA last?
Many CVAs run for three to five years, but the length depends on the proposal, the company’s forecast, and what creditors are likely to accept.
Do directors stay in control during a CVA?
In most cases, yes. Directors normally continue to run the business day to day, while the arrangement is supervised by an insolvency practitioner.
How do creditors vote on a CVA?
Creditors vote on the proposal. A CVA is approved if 75% of creditors by value who vote support it.
What happens to HMRC arrears?
HMRC is a creditor and is included in the voting and proposal terms. A CVA can work where HMRC arrears are the primary issue, but the proposal must be credible and affordable.
Can creditors still take legal action after a CVA is in place?
Once approved, a CVA is intended to prevent creditors from taking enforcement action outside the agreed terms, provided the company keeps to the arrangement.
What if the company misses CVA payments?
Missing payments can put the CVA at risk. The supervisor may allow time to catch up depending on the terms, but persistent failure can lead to termination and creditors resuming action. If that happens, directors often need to switch to another route such as liquidation.
Will a CVA affect the company's credit rating?
A CVA can affect how lenders and suppliers view the business, and some suppliers may tighten terms. This is why it’s important to plan supplier communication and ensure the proposal is built on conservative assumptions.
Is a CVA cheaper than liquidation?
It depends. CVAs have nominee and supervisor costs, but they are spread over the life of the arrangement in many cases. Liquidation has a different cost structure. If you’re comparing routes, it can help to read our plain-English company liquidation guide alongside CVA information.
Can a CVA be used to save part of the business?
Sometimes. A CVA can stabilise the trading company and preserve value, but the details depend on the creditor position, assets, and contracts. Where a sale or restructure is needed quickly, administration can sometimes be a better fit.
Speak to Anderson Brookes for CVA Advice
If your business is still viable but creditor pressure is increasing, a CVA may give you a structured route to regain control and keep trading. The fastest way to find out is to speak with the team at Anderson Brookes.
When you contact Anderson Brookes, we will:
- review whether a CVA is realistic based on your cashflow and creditor position
- explain how creditor voting is likely to work in your case
- talk you through alternatives if a CVA isn’t the right fit
- outline the next steps and timescales if you decide to proceed
For a free, no-obligation consultation, get in touch with us today. Call 0800 1804 935 or contact us online.