What Happens When a CVA Ends, Fails or Is Terminated?

When the company has met the obligations set out in the arrangement, the CVA can be formally completed.

Typically, this means:

• agreed contributions have been made;
• creditors have received the return required under the CVA;
• debts covered by the arrangement are treated according to its terms;
• the supervisor completes the formal process; and
• the company continues trading.

A successful CVA does not mean the company closes.

That is one of the main differences between a Company Voluntary Arrangement and liquidation.

A missed payment does not necessarily mean the company immediately enters liquidation.

The first step should be to speak to the insolvency practitioner supervising the arrangement.

Depending on the terms of the CVA, there may sometimes be scope to:

• make up the missed payment;
• agree additional time;
• vary future contributions; or
• change another part of the arrangement.

However, repeated missed payments or a fundamental inability to afford the CVA are much more serious.

For a wider explanation of how the arrangement operates, see our CVA process guide.

If the company cannot maintain the arrangement, the CVA may ultimately fail or be terminated.

At that point, creditors may be able to resume enforcement action.

Possible outcomes can include:

• varying or renegotiating the arrangement where permitted;
• another restructuring solution;
• Administration; or
• liquidation.

A failed CVA does not automatically mean the company enters liquidation immediately, but it does mean directors need to reassess whether the business can still be rescued.

Potentially.

Some CVAs allow changes to be considered where the company’s circumstances have materially changed.

A variation could potentially involve changes to:

• contribution amounts;
• payment dates;
• the duration of the arrangement; or
• other agreed terms.

Whether this is possible depends on the original proposal and any creditor approval required.

Directors should therefore speak to the supervisor before simply stopping payments.

Potentially.

If the company’s obligations can be satisfied sooner than expected, early completion may be possible.

This might happen because of:

• stronger-than-expected trading;
• refinancing;
• investment;
• sale of an asset; or
• another source of funding.

For more detail, see how long a Company Voluntary Arrangement lasts.

If your company is struggling to maintain its CVA payments, dealing with the problem early can preserve more options.

Business Helpline provides free, confidential and unbiased initial advice to limited company directors.

We can help you consider:

• whether the problem is temporary or structural;
• whether the CVA remains affordable;
• whether a variation may be possible;
• whether Administration could still work; and
• whether liquidation needs to be considered.

Call our free 24-hour helpline on 0800 088 2142 or request a confidential call back.