In Q1 and Q2 of 2016, there were 7330 total company insolvencies in England and Wales (according to provisional figures provided by the Insolvency Service). Of that number, there were just 191 CVAs in the same period. To put this in more context, there were 5009 voluntary liquidations, 1,475 compulsory liquidations and 654 companies put into administration in Q's 1 & 2 of this year.
In the last 10 years, the year 2012 had the highest number of CVAs accepted: there were 816 new CVAs agreed in 2012, but there has been a dramatic decline in the number of CVAs each year since. Whilst over the 10 year period, the average number of CVAs per year would be 602, in the last 3 years, there has been an average of 488 new CVAs accepted each year.
We can see here that CVAs are most common in these industries:
Of all the industries, manufacturing, construction and wholesale and retail trade combined with motor vehicle repairs overwhelmingly stand out as the industries in which CVAs are most commonly accepted.
CVAs are a really useful tool for restructuring debt. In some cases, they may also enable a percentage of the company's debts to be written off. However, for CVAs to work, the company has to be able to commit to a long-term payment plan which is usually in the region of 5 years. For this reason, both your insolvency practitioner and the company's creditors have to be confident that the CVA will work for it to be proposed and agreed. This is why liquidation and to a lesser extent, administration are more popular insolvency tools for those companies unable to commit to a long-term debt management plan.
If you'd like to find out more about CVAs, follow the links below for related pages. Alternatively, for more detailed advice, contact one of our business rescue experts directly.