Company Voluntary Arrangements (CVA)

A CVA may be the right solution if your business is fundamentally viable but facing financial pressures such as:

• Mounting creditor demands or arrears
• Temporary cashflow difficulties
• Legacy debts that no longer reflect current trading
• HMRC arrears or time-to-pay challenges
• Loss-making contracts that have since been addressed
• Delays in customer payments or project cycles
• Threats of legal action, CCJs, or winding-up petitions

A CVA is often appropriate when:

• The business can generate consistent future income
• Directors want to retain control of day-to-day operations
• Creditors would receive a better return than in liquidation
• Operational improvements have already been identified
• The company needs breathing space to stabilise

We will always provide honest advice on suitability.
If a CVA is not the right tool, we will explain the alternatives clearly.

1. Initial assessment and honest feasibility review

We start with a confidential review of the company’s financial position, forecasts, creditor pressure and underlying viability.
We explain:

• How a CVA works
• Whether it is realistically achievable
• What creditors are likely to accept
• Alternative restructuring routes

We will only recommend a CVA if it is genuinely viable.

2. Preparing a tailored CVA proposal (We act as Nominee)

This is where PKF Smith Cooper’s approach truly differs from volume CVA providers.

We take time to understand the realities of your business,not just the numbers.

Your proposal will include:

• A realistic cashflow forecast
• Sustainable contribution levels
• Detailed creditor analysis
• A statement of company viability
• Operational improvements implemented or planned
• Explanation of creditor returns vs liquidation
• Sector-specific considerations (e.g. seasonality, contract cycles, rent quarter dates)
• Justification for any variations or irregularities

For some companies, we structure monthly contribution CVAs.
For others, a lump-sum or hybrid CVA may deliver the best outcome.

We tailor the structure to your business, not to a template.

3. Issuing the proposal and creditor voting

Your CVA proposal is circulated to all unsecured creditors for consideration and a vote.

A CVA is approved if:

• 75% by value of voting creditors support it
• More than 50% by value of unconnected creditors vote in favour.

During this stage, creditors may propose modifications to the terms of the CVA. These might relate to contribution levels, duration, reporting requirements, or specific creditor interests.

Where modifications are proposed, we will:

• Explain each proposed change clearly
• Assess the practical and commercial impact on the business
• Advise you on whether the modifications are workable and sustainable
• Discuss the options available, including acceptance, negotiation, or rejection

Ultimately, the decision to accept modifications rests with the company, but it is always made with fully informed advice and a clear understanding of the consequences.

Once approved, the CVA becomes legally binding on all unsecured creditors, including those who did not vote or voted against it.

4. Supervising the CVA

Once approved, we act as the Supervisor, ensuring the CVA stays on track.

Our responsibilities include:

• Monitoring monthly contributions
• Reviewing company performance
• Distributing funds to creditors
• Communicating with creditors and stakeholders
• Addressing trading issues early
• Varying the CVA (with creditor approval) if circumstances change

Your responsibilities would include:

• Meeting contribution commitments
• Providing up-to-date financial information
• Notifying us of material changes
• Adhering to the terms approved by creditors

We work collaboratively to keep the CVA viable and supportive of ongoing trade.

5. Completion

Once the company has met its obligations:

• The remaining unsecured debts included in the CVA are written off
• Creditor claims are finalised
• The company exits the arrangement
• Directors regain full flexibility moving forward

A successful CVA can transform the future of a business.

A CVA offers a powerful combination of protection, structure, and commercial flexibility.

Key advantages include:

✔ Continued trading, in which directors remain in control
✔ Immediate protection from creditor pressure
✔ Affordable monthly or lump-sum contributions
✔ Lower creditor costs than liquidation
✔ Opportunity to exit unprofitable contracts
✔ Jobs preserved and business continuity maintained
✔ Better outcome for creditors than alternative procedures
✔ Minimises reputational impact
✔ Can be varied if circumstances change

For many businesses, it is the only workable rescue tool that avoids administration or liquidation.

A CVA is a formal, legally binding arrangement, and it is important that directors fully understand both the commitments involved and how those commitments are managed in practice.

Key considerations include:

Commitment to realistic contributions
A CVA is built on what the business can genuinely afford. Forecasts and contributions must be achievable as overly optimistic proposals increase the risk of failure. We focus on sustainability from the outset to avoid this.

Ongoing director responsibility
Directors remain in control of the company and are responsible for day-to-day trading. This includes ensuring CVA contributions are paid on time and that the business is managed in line with the assumptions set out in the proposal.

Creditor scrutiny and modifications
Creditors may propose modifications to the CVA before approval. These can affect contribution levels, asset realisations, or reporting requirements.
We will:

• explain each proposed modification clearly,
• advice on the commercial and practical implications, and
• support you in deciding whether to accept, negotiate, or reject them.

The final decision always rests with the directors, informed by clear advice.

Supplier and creditor relationships
Some suppliers or landlords may initially tighten terms or seek reassurance. We help you plan communications and manage these relationships to minimise disruption to trading.

Transparency and reporting requirements
The company must provide regular financial information, typically including management accounts and forecasts, so performance can be monitored against the proposal.

Risk of default if issues are not addressed
If payments are missed or the company materially underperforms, the CVA could be at risk. However, early engagement allows issues to be addressed, including seeking variations to the CVA where appropriate, subject to creditor approval.

Pro-forma or ongoing payment expectations
In some cases, creditors may expect ongoing (“pro-forma”) payments for goods or services supplied after the CVA begins. We factor this into cash flow planning so the business can continue trading effectively.

A CVA is not about short-term relief, it is about creating a stable, workable platform for recovery. Our role is to ensure there are no surprises and that directors enter the arrangement with clarity, confidence, and a realistic plan for success.