|A company voluntary arrangement ("CVA") is a legally binding agreement between the company and its creditors, so as to avoid or to supplement (such as an exit from Administration) other types of insolvency procedures. A CVA allows the Company a formal time to pay agreement with creditors over a fixed period of time, thus permitting the Company to continue to trade during the CVA and with the prospect of the Company surviving and avoiding liquidation. A successful CVA will also provide creditors with a better return than if the Company were to cease to trade and enter into liquidation.
The procedure is managed by a "Supervisor", who must be an authorised licenced insolvency practitioner, who is initially appointed by the Company or its directors with the primary task of ensuring that the Company complies with the obligations put before creditors and contained within a CVA proposal.
The proposed CVA will be presented to the company's creditors and shareholders; if approved by 75% of creditors by value that vote, the CVA will be approved. The Supervisor will oversee the conditions of the CVA, receive contributions from the Company and/or realisation of assets and make regular distributions to the Company's creditors in accordance with the terms set out in the CVA proposal.