Company Voluntary Administration, or CVA, is a legal agreement settled between a company and its creditors.
Essentially, what CVA does is it helps companies repay their debt without going into to administration, thus avoiding declaring bankruptcy. The company will pay debts over a set period of time.
The agreement between the two parties is based on having a vested interest in preserving the company, rebuilding sales and profits and then, of course, the company will repay the creditors over the set period.
It must be the case that 75 per cent of creditors need to be in agreement and in full support of the CVA.
Once the agreement has been made, the company can carry on trading as they usually would, the directors can conduct their usual duties and the personal guarantees usually will not get called in, which will give the business the chance to survive.
Who can get a CVA?
A CVA can only be proposed if a company is insolvent or contingently insolvent. It will be monitored by a supervisor who will be a licensed insolvency practitioner. The arrangement will usually last between 3 to 5 years, depending on a number of factors. It is therefore