Comparison · Business Insolvency · 2026
CVA vs Administration UK 2026: Business Insolvency Options Compared
When a limited company is struggling with debts it cannot pay, a Company Voluntary Arrangement and Administration are two of the main formal rescue routes — but they work very differently in terms of who stays in control and what protection they offer. This guide compares both for 2026.
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TL;DR - 30-Second Summary
- - CVA: directors stay in control, company keeps trading, needs 75% creditor approval by value
- - Administration: an administrator takes control, statutory moratorium on creditor action, often leads to a sale
- - Both aim to rescue the company or improve creditor outcomes versus liquidation
- - Always take advice from a licensed insolvency practitioner before choosing a route
Side by Side
| Feature | CVA | Administration |
|---|---|---|
| Who controls the business | Directors, IP supervises | Administrator |
| Statutory moratorium | Limited/none for most companies | Yes, automatic |
| Creditor approval | 75% by value must approve | Not required to appoint |
| Trading continues? | Usually, as normal | Sometimes, under administrator |
| Typical outcome | Repayment plan, company survives | Rescue, sale, or move to liquidation |
| Relative cost | Generally lower | Generally higher |
Verdict
A CVA suits a company with an underlying viable business, willing creditors, and directors who want to keep running it while restructuring debt. Administration suits a company facing more urgent creditor pressure (such as an imminent winding-up petition) that needs the automatic moratorium, or where a sale of the business as a going concern is the most realistic way to protect jobs and value. Both routes require a licensed insolvency practitioner from the outset — speak to one early, as options narrow the longer a company delays acting on financial difficulty.
Frequently Asked Questions
What is a Company Voluntary Arrangement (CVA)?
A CVA is a formal, legally binding agreement between an insolvent (or nearly insolvent) company and its creditors to repay some or all of its debts over an agreed period, typically three to five years, while the company continues trading. It is proposed by the directors with the help of a licensed insolvency practitioner and needs approval from creditors holding at least 75% of the debt value voting. Directors remain in control of the business throughout.
What is Administration and how does it differ from a CVA?
Administration is a formal insolvency procedure where a licensed insolvency practitioner (the administrator) takes control of the company from the directors, with the primary objective of rescuing the company as a going concern, or if that is not possible, achieving a better result for creditors than liquidation, or realising assets to make a distribution to secured or preferential creditors. Directors lose day-to-day control once an administrator is appointed.
Who stays in control of the business — directors or an insolvency practitioner?
In a CVA, the directors remain in control of daily operations, with the insolvency practitioner acting as supervisor of the arrangement rather than running the business. In Administration, the administrator takes over control entirely, and directors' powers are suspended for the duration, though they may be retained in an advisory or employee capacity.
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What protection does each option offer from creditor action?
Administration provides a statutory moratorium — an automatic freeze on legal action, winding-up petitions and most creditor enforcement — as soon as the company enters administration, giving breathing space to restructure or sell the business. A CVA does not include an automatic moratorium for most companies (a limited small-company moratorium exists separately), though once a CVA is approved, creditors bound by its terms cannot pursue the debts covered outside the agreement.
Does a CVA or Administration always end in liquidation?
No — both are rescue-oriented procedures designed as alternatives to liquidation. A successful CVA can see a company trade its way back to solvency and exit the arrangement once payments are complete. Administration frequently leads to a sale of the business (sometimes as a "pre-pack" sale agreed before or shortly after appointment) as a going concern, preserving jobs and contracts, though if no viable rescue or sale is achievable the company can move into liquidation afterward.
Which is cheaper to run — a CVA or Administration?
A CVA is generally less expensive to administer than Administration, because it does not involve the same level of ongoing insolvency practitioner oversight of daily trading, and the company continues operating largely as normal under its existing management. Administration typically carries higher professional fees because the administrator is directly running (or urgently selling) the business and dealing with all creditor and regulatory obligations personally.
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Disclaimer: This comparison is general educational information and not legal or insolvency advice. Company insolvency involves director duties and personal liability risks. Seek advice from a licensed insolvency practitioner without delay. Refer to gov.uk for current guidance.