Resetting some of the more common misunderstandings about company voluntary arrangements (CVAs)

What is a CVA?
A CVA is just one kind of insolvency arrangement.
In a CVA, an insolvent company enters into a brokered agreement with its creditors to suspend all repayments and restructure the debt in such a way that allows the company to survive, make a profit and pay off as much debt as it can reasonably afford over a specified period of time.

“CVA’s are really expensive and not worth the money”
“You can pay up to £25,000 for a CVA and it doesn’t even get rid of your debts!”
“They start charging you from the first meeting and the fees just keep going up”

If you decide to pursue a CVA solution then it can cost between £3,000 and £10,000 but this depends on the size of your business, how many businesses you owe money to and how much.
We offer a free, no obligation online quote for any business and are always transparent and up-front about any costs that will be incurred as part of the process so there won’t be any surprises.

“A CVA can’t stop bailiffs coming round and grabbing your stuff”

A CVA offers legal protection from enforcement action once it’s been accepted by your creditors. If bailiff action has already commenced against you or you think it’s about to, we can negotiate with them to hold off until a CVA can be put in place.

“A CVA means you only have to pay back 10p in the £ on debts”

No. A CVA does not automatically reduce the amount owed. Any company in a CVA must still pay back its debts but only what it can reasonably afford. While being realistic about debts, creditors also expect honesty in financial declarations and won’t appreciate being misinformed about artificially low income estimates to avoid making larger payments.

A CVA will dissolve all your previous personal payment guarantees”

Not as such. We’ll negotiate with creditors on your behalf and look to reach agreement with those that you have outstanding personal guarantees with. While this might mean no further payment above the CVA contribution, sometimes they may need to be topped-up from personal funds.

“All my customers will be told about the CVA and they’ll know I’m in financial trouble”

Untrue. We have to contact your creditors and we have to file an official notice of the CVA at Companies House but these are the only notifications we make.

“The Insolvency Practitioner looks into all your personal history, not just financial”

Nope. In a CVA, your business continues to trade and operate as usual. We don’t carry out any investigations into directors’ and/or their conduct.

“My mate is an accountant, she can do the CVA for us and she’s cheaper too.”

She might charge less but legally she’s not allowed to. A licensed insolvency practitioner must implement and oversee the CVA process. There are also rules against conflicts of interest such as a practitioner overseeing the CVA for somebody they know.

“A CVA is permanent and responsible for zombie companies that only exist to pay off creditors”

A CVA agreement usually lasts a maximum of five years but could be longer or less than this depending on the level of debt involved and the amount your company can afford to put into the arrangement.  
The point of a CVA is to let the company run, make a profit and pay off debts. If the company doesn’t make a profit then not even a CVA could keep it from insolvency.

“The Insolvency Practitioner takes over your company and runs it – they become the boss!”

No thanks, we’re busy enough. Under a CVA arrangement you remain in control of your business. Our role is to review and agree the creditor’s claims, collect your contributions or assets as set out in the proposal then pay the creditors.
We can review the company’s finances at an agreed time interval to see if you’re doing better or worse than thought and change the CVA in accordance with this info

“Once the bank knows you’re in a CVA they will demand repayment of your loans and close your bank account and credit cards”

Not at all. In fact your day-to-day trading and arrangements don’t change. The CVA payments are an important expense but just another outgoing. You pay the money to use as your CVA supervisor and we distribute that money to your creditors.
You might have less options for raising additional finance and credit but so would any other company with similar financial issues in the current lending climate.

“You might make monthly payments but at the end the final payment is thousands as you have to pay off all of the remaining debt in one go”

Unlike a car purchase, there is no “balloon” payment waiting for you at the end.
The CVA is brought to a successful conclusion once you have made all the expected payments into the arrangement and we have paid all agreed dividends to your creditors.
Once this has happened then you are issued with a Certificate of Completion, and we prepare a final report on the CVA that is filed at companies house in London.


We hope we’ve been able to dispel some of the common myths and misconceptions around CVA’s but if you have any questions about any aspect of the process, the costs and your or our responsibilities please contact us and we’ll be happy to talk you through your various options.