Company Voluntary Arrangement (CVA)

Company Voluntary Arrangement (CVA) in Northern Ireland

A Company Voluntary Arrangement – or CVA – is a formal insolvency process which acts as a legally-binding payment plan between an indebted company and its creditors. The aim of a CVA is to restructure existing debts in an affordable way which gives the insolvent – yet ultimately viable – company, the time needed to trade its way out of its current challenges.

A CVA typically lasts for between 3-5 years, during which time the indebted company will make an agreed monthly contribution towards its debts. This payment will then be distributed amongst outstanding creditors on a pre-agreed basis. It is likely that some unaffordable debt will be written off as part of the process.

For many companies experiencing financial difficulties, there is a viable and profitable business at the centre, it is just weighed down by historical debts and burdensome liabilities. If this sounds like your company, a CVA could be the perfect solution.
A company can only enter into a Company Voluntary Arrangement under the guidance of a licensed insolvency practitioner. The insolvency practitioner will assume two distinct roles during the CVA process.

They will initially act as a nominee where they will draw up a proposal and submit this to the company’s creditors. A series of negotiations typically take place during this stage until a mutually agreeable monthly contribution is settled upon.

Once the CVA has been approved by creditors, the insolvency practitioner will then take on the role of supervisor which they will continue with until the conclusion of the CVA which typically lasts between 3-5 years. As the supervisor of a CVA, the insolvency practitioner will be in charge of collecting the agreed payment from the insolvent company and distributing this to creditors on a proportional basis.

“Before the Debt Management Plan, I felt like I was drowning in debt with no way out. It gave me the structure and support to manage my repayments and negotiate with creditors. For the first time in years, I can see a clear path forward, and the stress of juggling bills is finally easing.”

While CVAs can be a great way for an insolvent company to get back on its feet, this process is not suitable for all companies experiencing financial distress. The key is that the company must have a reasonable likelihood of being able to turn around its fortunes and eventually operate as a profitable entity. Creditors will be required to vote on the proposed CVA and they are only likely to approve this if you can demonstrate real viability in the long-term.

At Northern Ireland Debt Solutions, one of our licensed insolvency practitioners will be able to assess your suitability for a CVA and help you plot a route forward. If a CVA is appropriate for your circumstances, we will be there every step of the way, from drawing up an initial proposal to your creditors, through to negotiating a repayment plan which works for all parties. Take the first step today and arrange a free no-obligation consultation with a member of the team.