What is company voluntary arrangement under English company law?

A Company Voluntary Arrangement (CVA) is a formal insolvency procedure under English company law that allows an insolvent company to reach an agreement with its creditors to repay a portion of its debts over an extended period of time. Under a CVA, the company proposes a plan to its creditors that outlines how it intends to repay a portion of its debts over an agreed period of time, usually between two and five years. The plan must be approved by a majority of the company's creditors by value, and once approved, it binds all of the company's creditors, including those who did not vote in favor of the plan. A CVA is seen as a flexible and potentially more advantageous alternative to liquidation, as it allows the company to continue trading while repaying its debts. It also provides a way for the company to restructure its operations, reduce its costs, and increase its revenue, which can help to ensure its long-term viability. It is important to note that a CVA is a formal insolvency procedure, and as such, it can have significant consequences for the company, its directors, and its stakeholders. In particular, the company may be required to provide detailed information about its financial position, and the directors may be subject to restrictions or obligations under the CVA, such as reporting requirements or a ban on paying dividends. It is therefore important for a company considering a CVA to seek professional advice from a licensed insolvency practitioner, who can assist with the preparation of the plan, advise on the likelihood of its approval, and provide guidance on the potential consequences of the CVA for the company and its stakeholders.