Who approves a proposed Company Voluntary Arrangement (CVA)?

A proposed Company Voluntary Arrangement (CVA) is primarily approved through a dual process involving the company's members and its creditors. The members of the company first have the opportunity to approve the arrangement by a simple majority at a meeting. Following this, creditors are also involved, as they can approve the CVA by virtue of deemed consent, meaning that if they do not respond or object within a specified period, they are considered to have accepted the arrangement.

This dual approval process is significant because it balances the interests of both the company's shareholders and its creditors, allowing for a structured way to address the company's financial difficulties while aiming to preserve the business.

In contrast, government authorities do not play a direct role in approving CVAs, and the court is not exclusively responsible for granting approval since the process is primarily member- and creditor-driven. Additionally, while unanimous consent from creditors is ideal in some arrangements, a CVA can be approved with a simple majority from the members and deemed consent from the creditors, which showcases the flexibility of this approach in corporate restructuring.