CVA vs Administration: Key Differences Explained
The key difference is control. In a CVA, the directors stay in charge and the company keeps trading while repaying creditors over 3 to 5 years. In administration, a licensed insolvency practitioner takes control to rescue the company, sell it, or get creditors a better result than liquidation.
CVA vs administration vs liquidation: at a glance
The table below summarises how the three main UK corporate insolvency procedures compare. Each is implemented by a licensed insolvency practitioner, but they differ sharply in who holds control and what happens to the company.
| CVA | Administration | Liquidation | |
|---|---|---|---|
| Who is in control? | Directors stay in control | Administrator (an IP) takes control | Liquidator takes control |
| Does the company survive? | Yes — by design | Possibly — rescue, sale or wind-down | No — company is closed |
| Typical use | Viable business, too much debt | Rescue or better outcome than liquidation | No viable business to save |
| Effect on creditors | Paid a proportion over the term; bound by vote | Statutory moratorium; paid from realisations | Paid from asset sale in legal priority order |
| Approval needed | 75% by value of voting creditors | Court or out-of-court appointment | Members/creditors resolution or court |
| Typical cost | ~£5,000–£10,000 core fees, from contributions | Higher — reflects IP taking control | Varies, paid from realisations |
| Duration | Usually 3–5 years | Typically up to 12 months (extendable) | Until assets realised and company dissolved |
Figures are general guidance for UK companies; actual costs and timescales depend on the size and complexity of the business. For full detail on the CVA route, see our Company Voluntary Arrangement (CVA) full guide.
What is a CVA?
A Company Voluntary Arrangement (CVA) is a formal, legally binding agreement between an insolvent company and its creditors to repay an agreed proportion of its debts over a fixed period — typically 3 to 5 years — while the company continues to trade. It is proposed by the directors with the help of a licensed insolvency practitioner, who acts first as the nominee (drafting and presenting the proposal) and then as the supervisor (administering the arrangement).
The defining feature of a CVA is that directors remain in day-to-day control. The business keeps trading, keeps its contracts and staff where possible, and pays monthly contributions to the supervisor, who distributes them to creditors. Because the arrangement is built around keeping the company alive, it suits a fundamentally viable business that is profitable at an operating level but weighed down by historic debt — often HMRC arrears, supplier debt, or onerous leases.
A CVA in one sentence
A CVA is a deal: creditors accept a structured, partial repayment over several years because it gives them a better return than closing the company down, and the directors keep control in exchange for sticking to the plan.
A CVA needs approval by creditors representing 75% by value of those who vote. Once approved, it binds all unsecured creditors, including any who voted against it. For the full process, costs and eligibility, read our complete CVA guide, or see exactly what a CVA costs in our guide to CVA costs and fees.
What is administration?
Administration is a formal insolvency procedure in which a licensed insolvency practitioner is appointed as administrator and takes control of the company. From the moment of appointment, the directors' powers are suspended and the administrator runs the company. A key feature of administration is the statutory moratorium: a legal freeze that stops creditors taking or continuing legal action, which gives the administrator breathing space to act.
The administrator works towards one of three statutory objectives, in order: rescuing the company as a going concern; or, if that is not possible, achieving a better result for creditors as a whole than an immediate liquidation; or, failing that, realising property to pay secured or preferential creditors. In practice, administration is often used to stabilise a business and sell it — sometimes via a pre-pack administration, where the sale is arranged before appointment and completed immediately after.
Administration in one sentence
Administration hands the company to an insolvency practitioner who, protected by a legal moratorium, tries to rescue or sell the business to get the best achievable result for creditors.
CVA vs administration: the key differences
Both a CVA and administration can rescue a viable business, and both are run by a licensed insolvency practitioner. But the difference between a CVA and administration comes down to four things: control, survival, cost, and how creditors are treated.
Control
In a CVA the directors keep control and run the company throughout. In administration, the administrator takes control and the directors step back. This single point drives almost every other difference.
Survival
A CVA is designed to keep the existing company trading and emerging debt-free at the end. Administration may rescue the company, but it is just as often a route to selling the business and winding up the old entity.
Cost and disruption
A CVA is usually cheaper (around £5,000–£10,000 in core fees, drawn from contributions) and far less disruptive to customers and suppliers. Administration costs more because the IP takes on the whole company.
Creditors
A CVA must be approved by 75% by value of voting creditors and then pays them a proportion over the term. In administration, creditors are protected by the moratorium and paid from what the administrator realises.
A useful way to think about it: a CVA is something the directors do with their creditors; administration is something an insolvency practitioner does to the company on creditors' behalf. If your business is viable and you want to stay at the helm, a CVA is usually the starting point. If creditor pressure has already escalated — for example a winding-up petition has been served — the protection of administration may be necessary.
CVA vs liquidation
Where a CVA and administration both aim to save value, liquidation is fundamentally different: it ends the company. In a liquidation, a liquidator is appointed to sell the company's assets, distribute the proceeds to creditors in the legally set order of priority, and then dissolve the company. There is no surviving business and no further trading.
The choice between a CVA and liquidation usually turns on one question: is there a viable business underneath the debt? If the company is profitable at an operating level and only its accumulated debt is the problem, a CVA lets it trade out of trouble and preserve jobs, contracts and goodwill. If the underlying business model no longer works — declining demand, structural losses, no realistic path to profit — then a CVA would simply delay the inevitable, and an orderly liquidation may be the honest and responsible route.
It is also worth noting that directors have legal duties once a company is insolvent. Continuing to trade and run up further debts when there is no reasonable prospect of recovery can expose directors to personal liability for wrongful trading. Taking advice early — through a proper company restructuring assessment — protects both the business and the directors.
Which is right for my company?
There is no single right answer — it depends on the viability of the business, the level of creditor pressure, and how much time you have. As a starting point:
A CVA may be right if…
- • The core business is viable and profitable at an operating level
- • You want to keep control and keep trading
- • Debt — often HMRC, suppliers or leases — is the main problem
- • Creditors are likely to back a realistic repayment plan
Administration may be right if…
- • You need the immediate legal protection of a moratorium
- • Creditor or enforcement pressure has already escalated
- • The best outcome is a controlled sale of the business or assets
- • The company needs to be restructured before it can survive
Liquidation may be right if…
- • There is no viable business left to rescue
- • Continued trading would only increase creditor losses
- • Directors need a clean, orderly end to the company
The honest answer is that the right route can only be decided after a proper review of your numbers and your options. K2's initial assessment is always candid about viability — we will tell you whether a CVA is realistic, whether administration offers more protection, or whether closure is the responsible course.
Frequently asked questions
What is the difference between a CVA and administration?
The core difference is control. In a CVA, the directors stay in control and the company keeps trading while it repays agreed amounts to creditors over a fixed term, usually 3 to 5 years. In administration, a licensed insolvency practitioner is appointed as administrator and takes control of the company to rescue it, sell the business or assets, or achieve a better result for creditors than liquidation. A CVA is an agreement; administration is a procedure that puts an outsider in charge.
Is a CVA the same as administration?
No. A CVA and administration are different insolvency procedures. A CVA is a legally binding repayment agreement between the company and its creditors, supervised by an insolvency practitioner but run day to day by the existing directors. Administration is a formal procedure in which an administrator takes control of the company. Both can rescue a viable business, but only a CVA leaves the directors in charge.
Which is cheaper, a CVA or administration?
A CVA is usually cheaper than administration. A CVA typically costs in the region of £5,000 to £10,000 in core nominee and supervisor fees, with those fees normally drawn from the agreed monthly contributions rather than charged on top. Administration generally costs more because the administrator takes control of the whole company, with fees reflecting the greater work, risk and reporting involved. For a viable business that can keep trading, a CVA is often both cheaper and less disruptive.
Does the company survive in a CVA or in administration?
In a CVA the company survives by design. It continues trading throughout the arrangement and, once the agreed contributions are paid, the remaining CVA debts are written off and the company emerges. In administration the outcome is less certain. Administration can rescue the company as a going concern, but it is often used to sell the business or assets to a buyer, after which the original company may be wound up. A CVA is built around survival; administration is built around the best achievable outcome.
What is the difference between a CVA and liquidation?
A CVA is a rescue procedure and liquidation is a closure procedure. A CVA lets a viable company keep trading and repay a proportion of its debts over time while directors stay in control. Liquidation ends the company: its assets are sold, the proceeds are distributed to creditors, and the company is dissolved. A CVA is appropriate when the underlying business is sound but burdened by debt; liquidation is appropriate when there is no viable business left to save.
Can a CVA convert into administration?
Yes. If a CVA proposal is rejected by creditors, or if an approved CVA later fails because the company cannot keep up with contributions, the company may move into administration or liquidation. This is why getting the initial assessment right matters: choosing the wrong route, or a CVA with unrealistic terms, can simply delay a move into administration. Only a licensed insolvency practitioner can implement either a CVA or administration.
Not sure whether you need a CVA or administration?
The wrong choice can cost you control of your company. K2 offers a no-charge initial assessment — we will tell you honestly which route fits your situation and what the real options are.
30+ years turnaround experience · Confidential consultation · Honest about viability
Related Guides
Go deeper on each insolvency and rescue option.
Company Voluntary Arrangement (CVA): Full Guide
The complete pillar guide to CVAs — meaning, process, eligibility and implementation
How Much Does a CVA Cost?
CVA fees explained — nominee and supervisor costs and how they are paid
Pre-Pack Administration
How a pre-pack administration sale works as a business rescue route
Company Restructuring
The full picture of restructuring options for saving an insolvent company
Winding-Up Petition Guide
Urgent response strategies when facing a winding-up petition