When a business with debts wants to enter a CVA with their creditors, there has to be a vote between the creditors to see if this is agreeable for the majority of them. The vote must pass by a majority of creditors representing at least 75% in value of those voting.

If the CVA is voted through, all creditors are legally obliged to the terms of the arrangement, which will outline a structure of repayment for the company to make over a set period of time. This will usually mean that the business pays monthly sums to the supervisor of the CVA, which is divided between creditors.

A CVA can sometimes also involve the business selling some assets to repay creditors from the funds raised. This will be outlined in the terms of the arrangement if so.

The proposed repayment schedule and arrangements need to be approved by creditors and overseen by an insolvency practitioner or licensed supervisor to ensure that it's realistic.

It's often the case that creditors receive more of the funds they are owed through a successful CVA than they would if the business was liquidated, so creditors are often open to this route.

It's important that all of the parties involved get specialist company voluntary arrangement advice before entering into an agreement as all of the potential outcomes and consequences need to be understood. The arrangement is legally binding, so taking legal advice beforehand is necessary.

With extensive experience in supporting businesses in this area, we can offer accurate advice to help you make an informed decision about how to move forward. If you want specialist voluntary arrangement advice and support, the team at Forbes can help.