The Company Voluntary Arrangement (CVA) can be used to assist companies which are insolvent but have a basic underlying business that should be profitable in the future without having old debts holding it back.

Essentially, a proposal is drawn up by the directors or if the company is in liquidation or administration the liquidator or administrator.

The proposal must name an Insolvency Practitioner who will act as nominee and will call meetings of the members and creditors. The nominee also reports to the court on whether in his opinion a meeting of members and creditors should be called to enable them to consider the proposal.

The proposal takes effect and is binding on all creditors who had notice and were entitled to vote at the meeting if it is accepted by a majority of the members and in excess of 75% in value of creditors present and voting.

A supervisor is appointed at the meeting of creditors to administer the arrangement. His duties and powers will be set out in the voluntary arrangement.

Watch What Is The Difference Between A CVA And IVA? to learn more.