Company Voluntary Arrangement (CRA) meaning

An arrangement allowing a company to propose a compromise with its creditors to restructure debts and continue trading. It is a statutory procedure under the insolvency Act 1986 (Part I) for England & Wales and Scotland; Northern Ireland has parallel provisions in the Insolvency (Northern Ireland) Order 1989. Usually proposed by directors (or an administrator/liquidator) via a licensed insolvency practitioner (the nominee). Approval requires 75% in value of creditors present and voting and, separately, a simple majority of unconnected creditors. Once approved, it binds unsecured creditors entitled to vote; secured and preferential creditors are bound only if they consent. An insolvency practitioner acts as supervisor to implement and monitor the arrangement. A CVA does not provide an automatic moratorium; it is commonly paired with administration or a Part A1 moratorium. Used to compromise rent, trade and HMRC arrears, shed onerous liabilities by agreement and avoid liquidation. Limitations include inability to compromise security or third‑party guarantees without consent and potential challenge for unfair prejudice or material irregularity. In Ireland, there is no CVA; closest restructuring tools are examinership, schemes of arrangement (Companies Act 2014) and SCARP.