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Company Voluntary Arrangement
A Company Voluntary Arrangement (CVA) is a procedure whereby a company can continue to trade even though it is insolvent – in other words, the company cannot meet its on-going liabilities from the cash flow that is being generated from the company.
A CVA is to be used (rather than a Creditors Voluntary Liquidation) if the company has already or is likely to return to profitability in the near future and the debts can be paid off over an extended period of time. The CVA is a tailored plan to repay to creditors, usually over a 3 year period, what the company can afford to pay – typically, this is between 25 to 60% of the total debt.
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