What is a key characteristic of an Approved CVA?

An Approved Company Voluntary Arrangement (CVA) is characterized by its binding nature on all unsecured creditors who are included in the arrangement. This means that once the CVA proposal is approved by the necessary majority of creditors, it creates a legally binding agreement to which all of those creditors who have not voted against the proposal must adhere. This involves creditors receiving payments as outlined in the CVA terms, even if they initially disagree with the arrangement.

This characteristic stands in contrast to other arrangements where a subset of creditors might not be bound by the decision. Therefore, the binding nature of an Approved CVA is a crucial aspect, ensuring that it allows for an orderly repayment plan while providing protection from individual creditor actions during the arrangement's duration.

The other options refer to attributes that are not correct. For example, a CVA does not require a court order to be effective once approved by creditors; rather, it's a proposal made and accepted by the creditors. Similarly, a CVA can be proposed by the company itself, not only by creditors, and it is specifically designed for companies that are in financial distress, making its application relevant to insolvent companies rather than solvent ones.