Corporate and Business Law (Global) · Insolvency and administration

Company Voluntary Arrangements and Receivership Explained for ACCA

Updated 11 October 2026 · Fact-checked

A company voluntary arrangement (CVA) is a deal between a company and its creditors to pay debts in part or over time. Once approved by the required majority of creditors, it binds all unsecured creditors. A receiver is appointed by a secured creditor to collect and sell the charged assets and repay that creditor.

Understand Company Voluntary Arrangements and Receivership

Insolvency law gives a struggling company several routes. Two of them are the company voluntary arrangement (CVA) and receivership. They look similar on the surface, but they serve different people.

A CVA is a rescue tool. The directors propose to creditors that the company will pay less than it owes, or pay over a longer period, or both. An insolvency practitioner acts as the nominee and later as the supervisor. The proposal goes to the members and the creditors. If the required majority of creditors votes for it, the arrangement binds every creditor who was entitled to vote, even those who voted against or did not vote. The company keeps trading. The aim is a better return for creditors than liquidation would give.

A CVA does not normally bind secured creditors against their wishes. A secured creditor can still enforce its security unless it agrees otherwise. Preferential creditors cannot have their priority taken away without their consent.

Receivership is a secured creditor's remedy. A lender holding a charge, often a floating charge over the company's assets, appoints a receiver when the company defaults. The receiver's job is to take control of the charged assets, sell them or collect the income, and pay the appointing creditor. The receiver acts for that creditor, not for creditors generally. Any surplus goes to those next in line. Compare this with an administrator, who acts in the interests of creditors as a whole and aims to rescue the company or get a better result than liquidation.

In the Global variant, the exam tests principles, not one country's section numbers. Know who starts each process, who it binds, and whose interests the office-holder serves.

Key formulas to remember

Who proposes a CVA: Directors (or an administrator or liquidator) propose; a nominee reports to the court and then to creditors and members; The company stays under director control unless it is also in administration or liquidation.
Who is bound by a CVA: Approved by the required creditor majority → binds all unsecured creditors entitled to vote; Includes dissenting and non-voting creditors. Secured and preferential creditors are not bound without their consent.
Voting majority for creditors (common rule): At least 75% by value of those voting in favour; The usual rule is a 75% value majority, with a check that it is not defeated by more than half of unconnected creditors. Check your study text for the precise test used.
Role of a receiver: Receiver = agent of the appointing secured creditor's security → realise charged assets → repay that creditor; The duty is to the appointing creditor, not to unsecured creditors generally.
Receiver vs administrator: Receiver: benefit of the secured creditor. Administrator: benefit of creditors as a whole; The most common exam comparison.

How to solve Company Voluntary Arrangements and Receivership questions

Use this method for any question on CVAs or receivership, whether it is an objective test or a short written task.

1Identify the process. Is it a rescue deal with creditors (CVA), or a secured creditor enforcing a charge (receivership)?
2Identify who starts it. Directors propose a CVA. A secured creditor appoints a receiver.
3Identify whose interests the office-holder serves. A supervisor acts under the arrangement for creditors. A receiver acts for the appointing secured creditor.
4Check who is bound. A CVA binds unsecured creditors entitled to vote once the majority is reached. It does not bind secured creditors without consent.
5Check the approval rule if voting is mentioned. Apply the value majority given in the question or your study text.
6Decide what happens to the company. In a CVA it keeps trading under its directors. In receivership, the receiver controls the charged assets.
7Apply the facts to the question and state your conclusion in one clear sentence.

Quickest way: Three-question shortcut

When to use it: Use this for Section A and Section B objective questions, where you have about two to three minutes per question.

Ask: who started it? Directors means CVA. Secured lender means receiver.
Ask: who gains? All creditors points to CVA or administration. One secured lender points to receivership.
Ask: who is bound? A CVA binds unsecured creditors who could vote. A receiver acts on the charge only.
Eliminate options that say a CVA automatically binds secured creditors, or that a receiver owes duties to all creditors equally.

Common mistakes in Company Voluntary Arrangements and Receivership

Saying a CVA binds all creditors, including secured ones.
Students remember that it binds dissenting creditors and stretch the rule too far.
Fix: Say it binds unsecured creditors entitled to vote. Secured and preferential creditors need to consent to any loss of their rights.
Treating a receiver as acting for all creditors.
Students mix up the receiver with an administrator or liquidator.
Fix: Remember: the receiver realises assets for the appointing secured creditor. Others get only any surplus.
Thinking a CVA removes the directors.
Students assume every insolvency process replaces management.
Fix: In a CVA the directors usually stay in control. The supervisor oversees performance of the arrangement.
Confusing the nominee and the supervisor.
Both are insolvency practitioners in the same process.
Fix: The nominee reviews the proposal and reports. Once approved, the nominee normally becomes the supervisor who implements it.
Assuming a CVA is a type of liquidation.
It sits in the insolvency chapter with winding up.
Fix: A CVA is a rescue arrangement. The company continues to exist and trade.

Worked examples

Example 1

Zeta Ltd owes unsecured trade creditors a total of $400,000. Its directors propose a CVA offering 60 cents in the dollar over two years. Creditors holding $320,000 of debts vote. Of these, creditors holding $260,000 vote in favour and creditors holding $60,000 vote against. Assuming a 75% by value majority of those voting is required, is the proposal approved, and who is bound?

Show the solution

Total value voting is $320,000.
Votes in favour are $260,000.
Percentage in favour is 260,000 ÷ 320,000 = 0.8125, which is 81.25%.
81.25% is above the 75% required, so the majority test is met.
Once approved, the CVA binds all unsecured creditors entitled to vote, including those who voted against and those who did not vote.

Answer: Yes, the proposal is approved with 81.25% by value in favour. It binds all unsecured creditors entitled to vote, including dissenters and non-voters.

Example 2

Bellwether Ltd defaults on a loan from Norbank, which holds a floating charge over all the company's assets. Norbank appoints a receiver. The receiver sells charged assets for $500,000. Norbank is owed $450,000, and the receiver's costs are $20,000. Ignoring other claims, explain whom the receiver acts for and what happens to the proceeds.

Show the solution

The receiver is appointed by Norbank under its charge and acts to realise the charged assets for Norbank's benefit.
Proceeds are $500,000.
Deduct the receiver's costs of $20,000. This leaves $480,000.
Pay Norbank's debt of $450,000. This leaves $30,000.
The surplus of $30,000 does not belong to Norbank. It goes to those next entitled, such as other creditors or the company.

Answer: The receiver acts for Norbank, not for creditors generally. Norbank is repaid $450,000 after costs of $20,000, and the surplus of $30,000 passes to those next in priority.

Exam tips

Link each process to its starter: directors for a CVA, a secured creditor for receivership. Many wrong options swap them.
In Section A, watch for absolute words such as 'all creditors' or 'always'. A CVA does not bind secured creditors without consent.
When comparing a receiver and an administrator, write the key difference: one creditor versus creditors as a whole.
In Section B scenario questions, read for the charge. A floating charge holder with a default points to a receiver or an administration appointment.
Objective questions score all or nothing, so read all four options before choosing.

Practice questions from Insolvency and administration

Company Voluntary Arrangements and Receivership: frequently asked questions

What is a CVA in company law?

A company voluntary arrangement is a binding agreement between a company and its unsecured creditors to pay debts in part or over time. It needs the required creditor majority. The company continues to trade while a supervisor oversees it.

What is the difference between a receiver and an administrator?

A receiver is appointed by a secured creditor and acts to repay that creditor from the charged assets. An administrator acts for the creditors as a whole and aims to rescue the company or achieve a better result than liquidation.

Does a CVA bind secured creditors?

Not without their agreement. A secured creditor can usually still enforce its security. A CVA mainly binds unsecured creditors who were entitled to vote.

Who runs the company during a CVA?

The directors usually continue to run the company. The supervisor, an insolvency practitioner, monitors that the arrangement is carried out.