Disadvantages

• The company’s credit rating will be affected

• Failure to adhere to the terms of the agreement could result in the company being placed into Administration or liquidation

• The company will normally be prohibited form making distributions to shareholders for the duration of the CVA – i.e. no dividends

• The fact that the company is in a CVA will be visible on Companies House – customers and suppliers can easily find out that the company is in a CVA.

• Often directors and other related parties are required to postpone any payment of amounts owed until after the CVA has completed successfully.