Company voluntary arrangement Definition

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/ˈkʌmp(ə)ni/ /ˈvɒlənt(ə)ri/ /əˈreɪn(d)ʒm(ə)nt/

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What does Company voluntary arrangement mean?

An alternative to an insolvent liquidation, whether a creditors' voluntary winding up or a compulsory winding up, whereby a company enters into a binding arrangement with its creditors to compromise its debts.

The procedure is initiated by the company making a proposal to its creditors which is then voted upon by them and by the company's members at separate meetings. If a majority in excess of 75% in value of creditors present and voting approve the proposal, the arrangement is binding upon all creditors who could have attended the meeting or who could have attended if they had been given notice unless an objecting member persuades the court to order otherwise. The court has jurisdiction to set aside a company voluntary arrangement if there was a material irregularity or if the arrangement unfairly prejudices a creditor, member or contributory of the company.

Insolvency

View the related checklists about Company voluntary arrangement

Checklist for compromises of FCA-regulated entities: information requirements

Checklist for compromises of FCA-regulated entities: information requirements The Financial Conduct Authority (FCA) is the conduct regulator for financial services firms and financial markets in the United Kingdom. It has a duty under section 1B of the Financial Services and Markets Act 2000 (FSMA 2000) to pursue certain objectives, one of which is the consumer protection objective. The FCA lists its statutory objectives as to secure an appropriate degree of protection for consumers and to protect and enhance the integrity of UK financial markets, with a view to reducing the number of proposed compromises that they do not consider to be appropriate (see FG22/4, para 1.2). On 5 July 2022, the FCA published guidance on compromises of regulated firms (see FCA Guidance FG22/4 July 2022 and updated in January 2024) following their significant concerns about these tools being proposed and used by firms to avoid paying customers redress (see: LNB News 05/07/2022 72). Practitioners will need to take note of the guidance where the proposed compromise involves regulated companies, meaning...

Checklist of contents for a CVA proposal

Checklist of contents for a CVA proposal This Checklist looks at what information a company voluntary arrangement (CVA) proposal must contain as required by the Insolvency (England and Wales) Rules 2016 (IR 2016), SI 2016/1024 and Statement of Insolvency Practice (SIP) 3.2, as well as by other bodies which may be affected by the CVA, including the Pension Protection Fund (PPF) and British Property Federation (BPF): • the IR 2016, SI 2016/1024, rr 2.2, 2.3 • statement of Insolvency Practice (SIP) 3.2 • PPF requirements, see: Checklist for approval of CVAs involving the Pension Protection Fund • BPF requirement, see: Checklist: British Property Federation engagement protocol and red flags for company voluntary arrangements The CVA proposal will contain the terms of a compromise between a company and its creditors, and therefore must be comprehensive and accurate. Where the proposal or circumstances are complex, the draft should be reviewed or prepared by a lawyer to ensure it correctly reflects the intentions of the arrangement. The proposal needs to be clear and...

In what circumstances can a CVA be proposed and by whom?

What is a CVA?A company voluntary arrangement (CVA) is a binding arrangement made between a company and its creditors (Part I of the Insolvency Act 1986 (IA 1986)). It is the corporate equivalent of the individual voluntary arrangement (IVA). The company need not be insolvent to propose a CVA.The CVA was a major innovation introduced by IA 1986, Pt VIII. In contrast to IVAs, they initially did not prove so popular (with administrations being used instead) but have seen a resurgence when dealing with landlord’s liabilities. From 6 April 2017, the Insolvency (England & Wales) Rules 2016 (IR 2016), SI 2016/1024 apply to CVAs.A key, attractive, feature of a CVA is the ability of a majority of three-quarters in value of approving creditors to bind the minority of creditors even if they do not agree (see Practice Note: Differences between restructuring plans, schemes of arrangement, and CVAs).The CVA proposal and nomineeA CVA proposal is one which provides for a person called the nominee to act in relation to the voluntary...

Failure of the company voluntary arrangement (CVA)

There is no definition of ‘failure’ of a company voluntary arrangement (CVA) in the Insolvency Act 1986 (IA 1986). It does not explain when failure will take place, or what its effect will be.However, IA 1986 does recognise that an arrangement may ‘come to an end prematurely’ (see IA 1986, ss 5(2A)(b), 6(3)). This is defined as occurring when the CVA ceases to have effect ‘it has not been fully implemented in respect of all persons bound by the arrangement’ (see IA 1986, s 7B).The Insolvency (England and Wales) Rules 2016, SI 2016/1024 (IR 2016) apply to CVAs and also make some provision as to what must be done after termination; not more than 28 days after termination of the voluntary arrangement, the supervisor must serve a notice that the CVA has been terminated (see IR 2016, SI 2016/1024, r 2.44(1)).The notice must be accompanied by a report summarising receipts and payments and explaining why the arrangement has terminated. It must also include a statement of the amount paid (if...

Discover our 162 Practice Notes on Company voluntary arrangement

Systems integration agreement—pro-supplier

Systems integration agreement—pro-supplier This AgrEement is made on [date] Parties 1 [insert name of supplier], a company incorporated in [England and Wales] under number [insert registered number] whose registered office is at [insert address] (Supplier); and 2 [insert name of customer], a company incorporated in [England and Wales] under number [insert registered number] whose registered office is at [insert address] (Customer) (each of the Supplier and the Customer being a party and together the Supplier and the Customer are the parties). Background (A) The Customer wishes to procure software, [hardware], software configuration and development services, installation services and other related services. (B) The Customer has agreed to procure the Services from the Supplier and the Supplier has agreed to provide the Services to the Customer on the terms and conditions of this Agreement. The parties agree as follows: 1 Definitions and Interpretation 1.1 In this Agreement the following terms have the following meanings: Acceptance • means that: (a) the Customer confirms in writing that the...

Software development agreement

Software development agreement This Agreement is made on [insert date] (the Commencement Date) between the following: Parties 1 [insert supplier name] a company incorporated in England and Wales whose registered number is [insert company number] and whose registered office is at [insert registered office] (the Supplier); and 2 [insert customer name] a company incorporated in England and Wales whose registered number is [insert company number] and whose registered office is at [insert registered office] (the Customer), each of the Supplier and the Customer being a party and together the Supplier and the Customer are the parties. Background (A) The Supplier is [insert Supplier’s background details and the background to the relevant transaction]. The Customer is [insert Customer’s background details]. (B) The Supplier wishes to develop certain Software (as defined below) and the Customer wishes to engage the Supplier to develop the same on the terms of this Agreement. The parties agree: 1 Definitions and interpretation 1.1 Words shall have the meanings given to them...

Dive into our 124 Precedents related to Company voluntary arrangement

Is it permissible for a creditor to make an application to court for permission to issue proceedings against a company in a company voluntary arrangement? If so, under what provision?

Is it permissible for a creditor to make an application to court for permission to issue proceedings against a company in a company voluntary arrangement? If so, under what provision? We refer you to Practice Note: Claims against companies subject to a company voluntary arrangement (CVA) which you may find useful for your purposes. If the claim is not

If a tenant has entered into a company voluntary arrangement and subsequently agrees terms with a landlord for a renewal lease, can the landlord forfeit the renewal lease on the grounds of the tenant's existing CVA?

If a tenant has entered into a company voluntary arrangement and subsequently agrees terms with a landlord for a renewal lease, can the landlord forfeit the renewal lease on the grounds of the tenant's existing CVA? A company voluntary arrangement (CVA) is a statutory contract between the company and its creditors and is used by a company in financial difficulty to restructure its debts. If the CVA receives the requisite 75% majority of the vote of creditors present in person or by proxy and voting on the proposal, and is not opposed by more than 50% of independent creditors, it will be binding on all creditors. Even if a landlord does not receive notice of the CVA proposal or votes against it, as long as the CVA is approved (and absent any grounds to challenge), it will be binding on the landlord. A landlord will retain a right to forfeit in respect of rents due under the CVA, unless it is expressly excluded under the terms of the...

See the 43 Q&As about Company voluntary arrangement

Construction weekly highlights—1 August 2024

This week's edition of Construction weekly highlights includes a case in which the Technology and Construction Court (TCC) rejected arguments that a sub-contractor’s claims were compromised in a company voluntary arrangement and that an adjudicator's decision had been procured by fraud (Henry Construction v ProMEP), a case in which the court considered an application for reverse summary judgment with regard to breach of contract and unjust enrichment (Matrix Receivables v Musst Holdings), publication of the seventh annual survey of international arbitration statistics by the ��Ӱ�� Arbitration Blog, and guidance published by the Crown Commercial Service (CCS) on the meaning of ‘call-off’ in procurement.

Sub-contractor’s claims against contractor were not settled by a CVA (Henry Construction v ProMEP)

Construction analysis: The Technology and Construction Court (TCC) found that an adjudicator’s decision was enforceable against a contractor, rejecting arguments that the sub-contractor’s claims had been compromised in a company voluntary arrangement, and that the adjudicator’s decision had been procured by fraud.

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