Company voluntary arrangement

The CVA is a form of composition, similar to the personal IVA (individual voluntary arrangement), where an insolvency procedure allows a company with debt problems or that is insolvent to reach a voluntary agreement with its business creditors regarding repayment of all, or part of its corporate debts over an agreed period of time.

[1] A company voluntary arrangement can only be implemented by an insolvency practitioner (IP), who will draft a proposal for the creditors.

In order to initiate a CVA, a specific process must be followed to assess the company's viability for the arrangement and to establish a business recovery plan.

In an extreme case directors can be found personally liable to contribute towards the shortfall in payments to creditors.

An adjudicator, appointed to direct how the dispute between the companies should be addressed temporarily, decided that Dartmoor should pay Mead £350,000 of outstanding debt.