To enter into a Company Voluntary Arrangement, it is imperative to have the agreement of the creditors. So the steps to enter into a Company Voluntary Arrangement are as mentioned below:

• A CVA can be formed and proposed only by an insolvency practitioner so it is important and the very first step.
• Once the insolvency practitioner is contacted, he needs to be given a thorough and necessary understanding of company affairs.
• The timescale from initial contact with an Insolvency Practitioner to the agreement of a Company Voluntary Agreement is usually six to eight weeks.
• Insolvency practitioner will start drafting the written proposal for the arrangement. In order for him to do come up with an effective proposal, he needs to understand the company affairs i.e. the detailed review of the company, its liabilities and assets, creditors and total money owed to them and then draft an arrangement which is a solution for the creditors as well as the business.
• The draft, once reviewed by the Directors of the company in picture, the Insolvency Practitioner will write to the creditors inviting them for the creditors meeting. Company directors may agree to the terms of the arrangements or request amendments. However, even if there are any amendments or suggestions from the Directors side, it is the Insolvency Practitioner who needs to be satisfied that the arrangement has a fair chance of success to be approved by the creditors.
• The idea behind creditors meeting is to understand the concerns, if any, of the creditors and to cast their votes in favour or against the proposed draft of the Company Voluntary Arrangement.
• It is always better if the creditors are present in the meeting in person. However, if they are not able to do so, they can cast their vote either by email or post.
• Directors of the company are not obligated to attend the creditors meeting.
• At least, 75% of the creditors agree (by value of debt) to the proposal for it to be sanctioned. In case, the vote is lesser than the 75% of the creditors (by value of debt), the proposal will not be approved.
• Apart from this common meeting for the creditors, there will be a separate meeting for the connected creditors such as employees or directors and at least 50% of the connected creditors (by value of debt) need to agree for the draft to be approved.
• Once voting is done and proposal is approved, the creditors are then legally bound to accept the terms of the agreement-including those who have not attended the meeting and those who did not vote.
• Company Voluntary Arrangement might have an arrangement where the directors agree on repayment of corporate debts in a specified period of time or they might have to sell company assets and repay the creditors. Whichever agreement is put in place, once approved, all involved parties have to adhere to the terms and conditions set out.
• For a CVA to be approved by the creditors, they need to be reassured that they will get their money back, at least major chunk of it, if not all of it. And to assure this, the terms of the proposal need to be realistic i.e. the company should be able to afford the terms and conditions of the payment from their monthly income.
• It is imperative of the Insolvency Practitioner to be present in the meeting.
• Once the proposal is approved by the creditors, Insolvency Practitioner has to issue a report to the court and all the creditors within four working days. The report should list down the outcome of each meeting and vote i.e. who was there and the results of each vote.
• The effective date of Company Voluntary Agreement is from the date of the creditors meeting and from that date, they cannot take any action against the directors of the company, unless there is a default of any kind like missed payment dates. In this case, compulsory liquidation of the company becomes only possible solution.
• So, as an Insolvency Practitioner, it becomes even more important to model the payment structure in a manner which is feasible for the directors to adhere to.

Usually, even if the creditors’ money is at risk, they are more than willing to support Company Voluntary Agreement even though the chances of recovering their full amount is not very bright, as opposed to the alternative measures like company liquidation.