What happens if a company fails to meet the terms of its CVA?

If a company defaults on its CVA, serious consequences can follow. The insolvency practitioner supervising the arrangement has the power to terminate the CVA if payments are missed or terms are breached. Once terminated, creditors are no longer bound by the arrangement and can pursue enforcement action to recover debts. This may include issuing statutory demands, filing winding-up petitions, or appointing bailiffs. For directors, failure of a CVA can mean losing the protection from legal action that the arrangement provides, placing the business back at immediate risk of liquidation. However, not all breaches automatically result in termination. Minor payment delays can sometimes be renegotiated, particularly if the company has a good history of compliance and the underlying business remains viable. Communication with the insolvency practitioner is essential to avoid sudden collapse. Ultimately, the success of a CVA depends on the company maintaining discipline with cashflow and meeting its obligations consistently throughout the term of the agreement.