HomeFWJ TakeawayCompany rescueBusiness recovery and rescueWhat is a voluntary arrangement for a company?

A CVA can be a great way to help a company suffering with cashflow issues. Our brilliant team can see if this is an options for you.

A voluntary arrangement for a company is also known as a company voluntary arrangement and is a binding contractual agreement made between a company (which may be in a business turnaround situation), and its creditors. A company voluntary arrangement (or voluntary arrangement) will often be used by a company restructuring itself as part of a business recovery strategy in order to lead to a company rescue. It is a business restructuring tool which can assist in bringing about a company rescue and a business turnaround. It can take the pressure off any business turnaround from the threat of immediate proceedings by one or more of the company creditors.

Company voluntary arrangement

A company voluntary arrangement is a contractual voluntary arrangement made between a company and its creditors. It is not necessary for the company to be insolvent to use a company voluntary arrangement, but inevitably that company will be in some sort of business turnaround situation and will be looking at a business recovery.

Benefits of a company voluntary arrangement

The voluntary arrangement is a flexible tailored arrangement the terms of which are decided between the company in company rescue and its creditors. The benefit to business recovery for the company in company rescue is that the creditors of the company under the company voluntary arrangement will usually agree to a reduced sum in repayment of their debts, and in return they will not take proceedings against the company for an agreed period of time.

  • the benefit of the company voluntary arrangement in a business recovery for creditors is that as part of the voluntary arrangement and company rescue package there will be specific money set aside to pay them, sometimes from the sale of parts of the business in business turnaround, or from a third party, specifically to pay creditors;
  • therefore, whilst in a voluntary arrangement they may not be repaid in full, if the business recovery strategy works and this leads to a successful company rescue, they are likely to achieve a better return on their debt than if the company were put into a more formal insolvency process.

In a company rescue, a company voluntary arrangement is often suggested by a business rescue expert because at the time of the voluntary arrangement all creditors of the company are bound by that company voluntary arrangement if they were entitled to vote. The company voluntary arrangement will go through if the majority of three quarters in value of approving creditors agree, and they will bind the minority of creditors in any voluntary arrangement.

Any company considering a company voluntary arrangement as part of a company rescue package or part of business restructuring, should contact our company voluntary arrangement expert team here at Francis Wilks & Jones to discover whether a voluntary arrangement could be the right process for your business needs, to help bring about a business turnaround and business recovery. Contact us to discuss further.

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