A Company Voluntary Arrangement (CVA) commonly lasts for several years, but there is no single fixed statutory duration that applies to every company.
The length of the arrangement is set out in the approved CVA proposal and depends on factors such as the company’s affordability, creditor expectations, projected cash flow and the amount that needs to be repaid.
💡 Quick Answer
A Company Voluntary Arrangement often runs for around three to five years, but there is no fixed legal term that applies to every CVA.
The actual duration is set by the approved proposal and depends on what the company can realistically afford, the level of creditor debt and the terms creditors agree to.
Some CVAs may finish early if the arrangement allows and the required obligations are satisfied, while others may be extended or modified if circumstances change.
What Is the Typical Length of a CVA?
Many Company Voluntary Arrangements are structured to run for around three to five years.
That is a common commercial timeframe rather than a statutory rule.
A shorter or longer period may be appropriate depending on:
- the amount owed to creditors;
- what the company can afford to contribute;
- projected future profitability;
- cash-flow forecasts;
- creditor expectations; and
- the terms negotiated in the proposal.
The most important point is that the repayment schedule must be realistic and sustainable.
A CVA that looks attractive on paper but leaves the company unable to meet its ongoing liabilities is unlikely to succeed.
When Does the CVA Term Start?
The arrangement begins once the CVA proposal has been approved in accordance with the required creditor decision procedure.
The approved proposal will specify:
- when payments begin;
- how often contributions are due;
- how long the arrangement is expected to run;
- what reporting or review requirements apply; and
- what happens if the company breaches the terms.
The insolvency practitioner then acts as supervisor of the arrangement.
For the full step-by-step procedure, see our CVA process guide.
What Determines How Long a CVA Lasts?
The term needs to balance two competing objectives:
- giving creditors a reasonable return; and
- ensuring the company can actually afford the arrangement while continuing to trade.
Factors that can influence the duration include:
The company’s available cash flow
The company must be able to make its CVA contributions while also paying new liabilities such as wages, suppliers, rent and tax as they fall due.
If monthly affordability is limited, the arrangement may need to run for longer.
The amount owed to creditors
A company with a larger historic debt burden may need a longer repayment period, depending on the proposed return.
Future profitability
The proposal will usually rely on forecasts showing what the business is expected to generate in the future.
If the company has a strong recovery plan, creditors may be more confident in a longer arrangement.
Creditor expectations
Creditors will consider what they are likely to receive through the CVA compared with alternatives such as liquidation.
The proposed duration therefore needs to make commercial sense to creditors as well as the company.
Does a CVA Have to Last Five Years?
No.
A five-year arrangement is common, but it is not a legal requirement.
The actual term is determined by the proposal approved by creditors.
Some arrangements may run for three years, others for five years or potentially for a different period.
The key requirement is that the proposal is realistic, affordable and capable of delivering the outcome offered to creditors.
Does a CVA Have to Last Five Years?
Potentially, yes.
A CVA may be capable of early completion if the terms of the arrangement allow it and the company’s obligations can be satisfied sooner than expected.
For example, this could potentially happen where:
- company performance improves significantly;
- additional funds become available;
- an asset is sold;
- external investment is introduced; or
- the company can make an agreed early settlement.
Whether early completion is possible depends on the precise terms of the approved CVA.
Directors should therefore speak to the supervisor before assuming that paying a lump sum will automatically bring the arrangement to an end.
Can a CVA Be Extended?
Potentially.
If circumstances change, it may sometimes be possible to vary the terms of a CVA, including its duration.
This could be relevant where the company remains viable but experiences an unexpected temporary setback.
Any variation would need to follow the procedure set out in the arrangement and may require creditor approval.
An extension should not simply be used to postpone an arrangement that has become fundamentally unaffordable.
If the business is no longer viable, a different insolvency option may need to be considered
What Can Make a CVA Last Longer Than Expected?
Potentially, yes.
A CVA may be capable of early completion if the terms of the arrangement allow it and the company’s obligations can be satisfied sooner than expected.
For example, this could potentially happen where:
- company performance improves significantly;
- additional funds become available;
- an asset is sold;
- external investment is introduced; or
- the company can make an agreed early settlement.
Whether early completion is possible depends on the precise terms of the approved CVA.
Directors should therefore speak to the
Several issues can affect the practical duration of an arrangement.
These may include:
- weaker-than-forecast trading;
- temporary cash-flow problems;
- late customer payments;
- unexpected costs;
- changes in tax liabilities;
- disputes over creditor claims;
- agreed variations to the proposal; or
- extensions approved by creditors.
A CVA works best where directors monitor performance closely and identify problems early.
Waiting until several payments have been missed can make the situation much harder to resolve.
supervisor before assuming that paying a lump sum will automatically bring the arrangement to an end.
What Happens During the CVA?
Throughout the arrangement, the company continues trading under the control of its directors.
The directors must ensure that:
- agreed CVA contributions are made;
- ongoing tax liabilities are paid;
- suppliers and employees are paid;
- the company complies with the terms of the proposal; and
- information requested by the supervisor is provided.
The supervisor monitors compliance and deals with the arrangement in accordance with its terms.
The company should therefore treat the CVA period as a financial recovery phase, not simply a payment holiday.
What Happens When a CVA Is Completed?
Once the company has satisfied the obligations set out in the arrangement, the supervisor completes the CVA in accordance with its terms.
The company can then continue trading without the historic liabilities that have been dealt with under the arrangement.
Successful completion can give the business a much stronger financial position than it had before the CVA began.
However, directors still need to make sure the company remains financially disciplined after completion.
Finishing the arrangement does not protect the company from future cash-flow problems or new debts.
What Happens if the CVA Cannot Be Completed?
If the company cannot maintain the agreed payments, the first step should be to contact the supervisor.
The outcome depends on:
- the terms of the arrangement;
- the reason for the payment problem;
- whether the underlying business remains viable; and
- whether creditors are prepared to approve any change.
In some cases, a temporary difficulty may be resolved through an agreed variation.
If the arrangement fails completely, creditors may regain enforcement rights and the company may ultimately need to consider options such as administration or liquidation.
This is why the initial affordability assessment is so important.
A CVA should be built around what the business can sustainably afford, not the highest payment directors hope they might be able to make.
Does the Company Keep Trading for the Whole CVA?
Yes, normally.
Continued trading is one of the central purposes of a Company Voluntary Arrangement.
The company remains active and the directors usually continue running the business while the CVA is supervised by the insolvency practitioner.
This is very different from liquidation, where the objective is to wind the company up.
For a wider explanation of suitability and how the procedure works, read our Company Voluntary Arrangement guide.
Can a CVA Be Cancelled Before the End?
A CVA cannot normally just be cancelled by the directors because they no longer want to continue with it.
It is a formal insolvency arrangement.
The consequences of ending or breaching it depend on the terms of the proposal and the circumstances.
Directors considering any change should therefore speak to the supervisor before taking action.
Need Advice About a Company Voluntary Arrangement?
If your company is struggling with debt but the underlying business remains viable, Business Helpline can help you understand whether a CVA may provide a realistic route forward.
Our initial advice is free, confidential and unbiased.
We can help you consider:
- how long a CVA may need to run;
- what level of contribution could be realistic;
- whether the company appears viable;
- how creditors may be affected; and
- how a CVA compares with administration or liquidation.
Call our free 24-hour helpline on 0800 088 2142 or request a confidential call back.
Frequently Asked Questions About CVA Duration
How long does a CVA usually last?
Many CVAs run for around three to five years, although the exact duration depends on the terms approved by creditors.
Is five years the maximum length of a CVA?
No. There is no universal statutory five-year maximum applying to every CVA. The duration is determined by the terms of the arrangement.
Can a CVA last less than three years?
Potentially. A shorter arrangement may be possible where the proposal is affordable and provides an acceptable outcome for creditors.
Can you pay off a CVA early?
Potentially, if the arrangement permits early completion and the required obligations can be satisfied. The supervisor should be consulted before any early settlement is attempted.
Can a CVA be extended?
Potentially, yes. A variation or extension may sometimes be agreed where the company remains viable but circumstances have changed.
What happens when a CVA finishes?
When the obligations have been completed, the supervisor formally completes the arrangement in accordance with its terms and the company can continue trading.
What happens if a CVA fails before the end?
The outcome depends on the arrangement. Creditors may regain enforcement rights and the company could ultimately face administration or liquidation.
