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Company Voluntary Arrangement (CVA)
A CVA is a legally binding agreement with creditors to reschedule and/or reduce a company’s debts to allow it to carry on trading.
Whilst a CVA is in place creditors can’t take legal action against the company. The directors remain in full control of the business, although an insolvency practitioner must be involved in helping to draft the initial proposal to creditors and monitoring the arrangement if it’s approved.
CVAs tend to work best for businesses which would be able to trade profitably if their current cash flow issues could be resolved. They are often used to deal with the impact of a one-off event, such as a large bad debt, or a lost contract.