CVA v IVA How does a CVA compare to an IVA?

A Company Voluntary Arrangement (CVA) and an Individual Voluntary Arrangement (IVA) are two distinct debt relief mechanisms, each tailored for different entities and situations. Here are the key differences between a CVA and an IVA:


Applicable Entity:

CVA (Company Voluntary Arrangement): A CVA is designed for limited companies, including limited liability partnerships (LLPs), and other corporate entities. It is used when a company is facing financial distress and wishes to restructure its debts while continuing to trade.

IVA (Individual Voluntary Arrangement): An IVA is intended for individuals who are struggling with unmanageable personal debts. This includes self-employed individuals, sole traders, and anyone with personal debts, such as credit card debt or personal loans.



CVA: The primary goal of a CVA is to rescue a financially distressed company from insolvency by restructuring its debts and providing a framework for repayment to creditors. It aims to allow the company to continue its operations while addressing financial difficulties.

IVA: An IVA is aimed at helping individuals manage their personal debts by creating a legally binding agreement between the individual and their creditors. The objective is to provide a structured plan for debt repayment over a specified period while preventing the individual from declaring bankruptcy.



CVA: A CVA is initiated by the company’s directors or shareholders, with the approval of at least 75% of participating creditors (by value) required for it to proceed.

IVA: An IVA is initiated by an individual who is struggling with personal debts. It involves seeking assistance from a licensed insolvency practitioner to propose an IVA to creditors.


Debt Repayment:

CVA: In a CVA, the company commits to repaying its outstanding business-related debts over a fixed period, often with reduced monthly payments and extended terms. Creditors receive a portion of what they are owed, and any remaining debt is typically written off upon successful completion of the CVA.

IVA: An IVA involves an individual repaying their personal debts, such as credit card debts, personal loans, or overdrafts. Similar to a CVA, the individual agrees to make regular payments according to the terms of the IVA, often with the goal of repaying a portion of the total debt, with any remaining debt discharged upon successful completion.


Business Continuity:

CVA: A CVA allows a struggling company to continue trading and maintaining its business operations while addressing financial challenges.

IVA: An IVA does not directly affect an individual’s business operations if they are self-employed or a sole trader. However, an IVA may impact the individual’s personal finances and credit rating.


Legal Framework:

CVA: A CVA is a formal but voluntary arrangement governed by corporate insolvency laws. It requires the approval of both the company’s directors and a majority of participating creditors.

IVA: An IVA is a formal and legally binding agreement for individuals governed by personal insolvency laws. It requires the approval of the individual’s creditors, usually by a simple majority.


In summary, the primary distinction between a CVA and an IVA lies in their applicability (company vs. individual) and objectives (company debt restructuring vs. personal debt relief). Both mechanisms provide a structured approach to managing debts, but they are tailored to the specific financial circumstances of either a company or an individual.