Voluntary Arrangement

A voluntary arrangement is a binding agreement between a debtor and their creditors to pay debts over time at a reduced rate. For individuals, it is called an Individual Voluntary Arrangement (IVA) under Part VIII of the Insolvency Act 1986. For companies, it is a Company Voluntary Arrangement (CVA) under Part I. Both require approval by creditors representing at least 75% in value of those voting.

In practice

An IVA typically lasts five to six years with the debtor making fixed monthly payments to a supervisor (a licensed insolvency practitioner). A CVA allows a company to continue trading while repaying creditors over an agreed period. Once approved, the arrangement binds all creditors who were entitled to vote, including those who voted against it. Enforcement action must cease once a voluntary arrangement is in force.