Can You Still Trade Under a Company Voluntary Arrangement?

For a company at risk of insolvency, entering a company voluntary arrangement or CVA is an opportunity to restructure the business for future success. But how does a CVA affect a company’s operations, especially its ability to continue trading? In this article, we’ll answer the question can you still trade under voluntary arrangement and explore how a CVA will affect the administration of your company.

Starting and running a successful business is not without challenges, especially financial. Despite the best efforts of employees and directors, mounting debts and an inability to make a consistent profit may force a business to consider insolvency to pay back their debts.

If you’re a business owner interested in recovering your company, there are other options available. Solutions such as a company voluntary arrangement serve as an opportunity to reassess and reorganise the business for long-term stability. In the process, it relieves the pressure of legal proceedings and debt collection.

Can a Business Still Trade Whilst Under a CVA?

The burning question for many business owners is, ‘can you still trade under voluntary arrangement?’ CVAs are an attractive solution for companies interested in continuing operations, as they can continue trading under voluntary arrangement. It’s one of the many benefits of this solution, as it allows a company to restructure their business whilst repaying their debts.

Moreover, CVAs differ from other solutions, which include appointing an administrator to run the business. Instead, a voluntary arrangement allows directors to maintain control of the company’s daily operations. Therefore, any concerns regarding how an administrator would run the company are avoided.

A company voluntary arrangement is an agreement made between a company and its creditors for long-term debt repayment. These proceedings require the employment of an insolvency practitioner to assess the circumstances and operations of the company, and propose solutions to creditors for repayment. Although the directors maintain control of the company’s operations, they are subject to the terms of the CVA prepared by the insolvency practitioner and agreed to by creditors.

The insolvency practitioner may conclude that certain contracts must be terminated, or some employees must be dismissed. And the directors are legally bound to fulfil those terms of the voluntary arrangement, despite maintaining control of the company’s operations.

Therefore, while the answer to the question can you still trade under voluntary arrangement is a positive one, it must be noted that trading and operations may change in order to fulfil the terms of the arrangement.

As a business owner or director, the profitability and success of your business is a primary concern. A company voluntary arrangement will allow you to repay your company’s debts and set it on the path for future success, as you can still trade under voluntary arrangement. However, you need an experienced insolvency practitioner who can assess and negotiate in your company’s best interests.

Irwin Insolvency has over 25 years’ experience helping floundering companies across numerous industries to recover from debt. For more information on CVAs and how our experienced practitioners can help your business, contact us by telephone at 0800 254 5122 or by email at mail@irwinuk.net.

More advice on Company Voluntary Arrangements from Irwin Insolvency

The complete guide to Company Voluntary Arrangements
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Can company voluntary arrangements save the high street?
Dealing with redundancy to employees during a CVA
How does a CVA affect a landlord?