IVA : What Is A CVA ?

There is much information available for people researching the IVA subject. The pros and cons of an IVA are well documented along with all the other aspects of the IVA process.

But in the shadows of an IVA exists an equally useful process for indebted Limited Companies. This is called a CVA or a Company Voluntary Arrangement, and here is a brief explanation of it.

A CVA, or Company Voluntary Arrangement, is a legally binding agreement between a Limited Company and its Creditors and forms part of the 1986 Insolvency Act.

A CVA is not to be confused with an IVA or Individual Voluntary Arrangement. A CVA is designed specifically for indebted Limited Companies whereas an IVA is designed for indebted individuals or Sole Traders.

Companies thinking about entering a CVA must remember that only Unsecured Creditors can be included and they must maintain repayments on any Secured Loans/agreements.

A CVA allows the Limited company experiencing cash flow problems to repay their liabilities either in part or in full over a period of time, tailored to suit the circumstances of the case, but no more than 5 years.

The CVA will include all unsecured liabilities and can also include Crown monies, for example VAT and Inland Revenue.

Just like the IVA , a CVA requires the approval of 75% of the voting creditors at the Creditors Meeting, also the CVA is binding of all creditors that are sent notice of the meeting, regardless of how they voted.

Once the CVA has been completed successfully, a completion certificate is issued and, just as in an IVA, any unsecured debts not repaid in full by the CVA are written off.

The Limited Company has now fulfilled its legally binding agreement, and is free to move forward, Debt Free.

• CVA Information