What a CVA is

A Company Voluntary Arrangement is a binding deal with your unsecured creditors: you pay an agreed proportion of what is owed over an agreed period, usually three to five years, and the company keeps trading with you still running it.

It is the only formal procedure that leaves the existing directors in charge.

Getting it approved

A licensed insolvency practitioner prepares the proposal and creditors vote. It needs 75% by value of those voting. Once approved it binds every unsecured creditor entitled to vote, including the ones who voted against.

What it does and does not cover

It compromises unsecured debt, including HMRC arrears and trade creditors, and stops most unsecured creditor action while it runs. It does not bind secured or preferential creditors without their agreement, and it does not release personal guarantees — a guaranteed creditor can still come to you for the shortfall.

When it works

You need a business that genuinely makes money, forecasts that stand up, and creditors who conclude they will do better than in a liquidation. It fails when the underlying trade is not actually profitable, when the forecast is optimistic, or when HMRC — usually the biggest creditor — does not support it.

If it defaults, the supervisor will normally petition to wind the company up, and you end up somewhere worse than where you started.