Company Voluntary Arrangement Success Rates

Financial difficulty places immense strain on businesses, their directors, and employees. For companies in the United Kingdom, a Company Voluntary Arrangement (CVA) can be a strategic option that provides breathing space, protects jobs, and allows directors to retain control while working toward recovery.

Let's take a closer look at company voluntary arrangement success rates, their advantages and disadvantages, and what businesses should consider when evaluating whether this restructuring tool is the right solution.

What is a Company Voluntary Arrangement?

A CVA is a formal agreement between a company and its unsecured creditors that sets out a plan for repaying debts over an agreed period, typically three to five years. Unlike administration or liquidation, directors remain in control of the business, enabling them to continue day-to-day operations while adhering to the repayment plan. The process is supervised by a licensed insolvency practitioner who ensures the proposal is workable and fair for all parties involved.

How Do CVAs Work?

Creating a path to sustainable recovery is never a one-size- fits-all endeavour. At Nexus Corporate Solutions Limited, we know that driving real CVA results hinges on crafting strategies that address the distinct challenges every business faces. Our approach combines a detailed analysis of your financial landscape with proactive, personalised intervention to keep operations both viable and resilient. Through transparent communication with creditors and ongoing support, we focus on developing debt restructuring plans that genuinely work. By prioritising practical solutions and long-term stability, we strive to lift businesses out of distress while protecting their legacy, workforce, and future growth potential.

The process begins with the preparation of a proposal, crafted by directors with the support of an insolvency practitioner. This proposal outlines repayment terms and must gain approval from at least 75% (by value) of voting creditors. Once approved, the CVA becomes legally binding on all unsecured creditors. This framework offers a structured approach to repaying debts while maintaining trading continuity and safeguarding the company’s value.

Success Rates of Company Voluntary Arrangements

Official insolvency statistics show that CVA outcomes vary depending on industry, company size, and the strength of the proposal. Businesses with realistic repayment schedules and strong creditor engagement achieve higher success rates. Many CVAs complete successfully, offering creditors better returns than liquidation would, while others fail due to poor forecasting or deteriorating trading conditions. Importantly, success depends not only on financial restructuring but also on a company’s ability to adapt its operations and restore profitability.

Advantages of a CVA

1. Continued Trading

Unlike liquidation, a CVA allows the company to continue operating, preserving contracts and customer relationships that might otherwise be lost.

2. Job Protection

By keeping the business running, employee roles are safeguarded. This stability helps maintain morale and retains the skills and knowledge essential for recovery.

3. Director Control

Directors remain in charge of the company, avoiding the transfer of control to administrators. This allows them to steer the business with professional support.

4. Improved Creditor Relations

Creditors benefit from transparency and a structured repayment plan, often receiving a higher return than they would in insolvency proceedings.

5. Reputation Preservation

A CVA reduces the reputational damage associated with liquidation, giving the business a chance to rebuild trust with stakeholders.

When is a CVA Suitable?

A CVA is most effective when a company is fundamentally viable but burdened by short-term financial pressures. It is suitable where the business has:

• Sustainable operations and strong potential for recovery

• Directors committed to restructuring

• Supportive stakeholders and creditors open to cooperation

• Reliable financial forecasts backed by professional advice

Comparing CVAs with Other Insolvency Options

• Administration: May offer protection but transfers control to administrators, reducing directors’ involvement.

• Liquidation: Ends the company’s trading life, selling assets to repay creditors, often resulting in job losses and reputational damage.

• Informal Agreements: Provide flexibility but lack the binding nature and legal protections of a CVA.

For many businesses, a CVA strikes a balance between creditor repayment and company survival.

Maximising the Chances of Success

Companies considering a CVA should engage experienced insolvency practitioners early. These specialists provide independent assessments, negotiate with creditors, and ensure the proposal is realistic. Open communication with creditors, accurate forecasting, and operational restructuring significantly increase the likelihood of a successful outcome.

Company Voluntary Arrangement Success Rates in Context

While success rates differ across industries, many businesses complete CVAs successfully, particularly when guided by professional advisors. The process allows companies to restructure debt, protect jobs, and continue trading, which often results in better outcomes for creditors than liquidation. However, the risk of failure remains if conditions change or repayment schedules cannot be maintained. Evaluating both the potential benefits and risks is essential before proceeding.

What are Your Next Steps

A Company Voluntary Arrangement can offer distressed businesses a practical path forward. By enabling continued trading, protecting jobs, and improving creditor cooperation, it provides a structured solution for financial recovery. Yet, businesses must carefully weigh the risks, including creditor approval challenges and credit rating implications.

If you are considering whether a CVA is the right option for your company, professional guidance is vital. At Nexus Corporate Solutions, licensed insolvency practitioners bring decades of expertise in restructuring. Contact our team today for a confidential consultation and take the first step toward stabilising your company’s future.