How does a CVA compare to administration?

Both CVAs and administration are formal insolvency procedures designed to rescue distressed companies, but they operate differently. A CVA allows directors to remain in control of the business, while an insolvency practitioner supervises the repayment plan. Administration, on the other hand, involves handing control of the company over to an administrator, who takes charge of operations and may sell the business. CVAs are less disruptive and often cheaper, making them suitable when the business is fundamentally viable but needs debt restructuring. Administration is more appropriate when urgent protection from creditors is required or when the company needs a managed sale to preserve value. A CVA does not provide the same immediate moratorium on creditor action that administration does, although courts can sometimes grant temporary protection during the proposal stage. Ultimately, CVAs focus on long-term survival through compromise, while administration provides short-term protection and restructuring options that may or may not save the business.