1. (company voluntary arrangement; CVA) A procedure provided for by the Insolvency Act 1986, in which a company may come to an arrangement with its creditors to pay off its debts and to manage its affairs so that it resolves its financial difficulties. This arrangement may be proposed by the directors, an administrator, or a liquidator and must be approved by meetings of both the company and its creditors. Once approved, the arrangement becomes binding on all the parties and a qualified insolvency practitioner is appointed to supervise it. The aim is to assist the company to solve its financial problems without the need for a winding-up (see liquidation.)
2. (individual voluntary arrangement; IVA) A similar agreement between a debtor and his or her creditors under the Insolvency Act 1986. It takes the form of either a scheme of arrangement or a composition and can be made either before or after a bankruptcy order is made. The terms of the arrangement must be agreed at a meeting between the debtor and his or her creditors and an insolvency practitioner appointed. If no agreement is reached, or the debtor subsequently fails to comply with the terms of an IVA, bankruptcy proceedings may be initiated or resumed. See Bankruptcy Law.
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