Company Voluntary Arrangement (CVA)
A flexible UK insolvency procedure under Part1, Insolvency Act 1986, constituting a statutory contract between the debtor company and its creditors, a CVA requires approval by 75% of the creditors who vote.
Usually prepared with the assistance of an insolvency practitioner (the nominee), the arrangement can provide for almost anything to be agreed between the debtor company and its creditors, although the rights of secured and preferential creditors cannot be prejudiced without their agreement and the expected outcome for creditors generally should be better than liquidation.
On approval of the CVA, the IP becomes the supervisor, usually a light-touch role, but with the power to end the CVA and put the company into liquidation if it breaches the CVA's terms.
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Date: 28th December, 2006
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