CVA vs administration comes down to control: a company voluntary arrangement (CVA) lets directors keep running the business while creditors are repaid over time, whereas administration hands day-to-day control to a licensed insolvency practitioner acting as administrator. Both are rescue tools under the Insolvency Act 1986, not routes to closure, but they suit different situations.
Choosing between them depends on how much creditor pressure the company is under, whether the business is fundamentally viable, and how much disruption trading can absorb. Both procedures are set out in the Insolvency Act 1986. This article compares the two side by side so you can see which route fits your circumstances before speaking to a regulated specialist.
CVA vs administration: two rescue routes, two different approaches
A CVA and administration are both formal insolvency procedures aimed at rescuing a company rather than winding it up. Beyond that shared goal, they work quite differently.
A CVA is a legally binding agreement between the company and its creditors to repay debts, usually over three to five years, while the directors stay in charge. Administration is a court-backed process in which an administrator takes control of the company to protect it from creditor action while a rescue plan is worked out.
For a wider view of every insolvency route available to a struggling company, see Company Insolvency Options: Which Route Is Right?, which sets CVA and administration alongside liquidation and other alternatives.
How a CVA restructures debt while you stay in charge
In a company voluntary arrangement, the directors propose a repayment plan to creditors, usually with help from an insolvency practitioner who becomes the supervisor once it's approved. Creditors vote on the proposal, and if enough agree, it binds all unsecured creditors — even those who voted against it.
Key features of a CVA:
- Directors remain in day-to-day control of the business throughout.
- Debts are usually repaid partially, over an agreed period, rather than in full immediately.
- Trading continues largely as normal, so contracts, staff and customer relationships stay intact.
- Approval requires at least 75% (by debt value) of creditors who vote to agree.
Our guide, What Is a Company Voluntary Arrangement (CVA)?, covers eligibility, the proposal process and what happens if creditors don't approve it. Official guidance on the process is also available from gov.uk on company voluntary arrangements.
How administration hands control to an administrator
Administration is a more formal step. An administrator — a licensed insolvency practitioner — is appointed to take control of the company, either by the directors, the company itself, or a qualifying floating charge holder such as a lender.
Once appointed, the administrator's statutory duty is to try to rescue the company as a going concern, achieve a better outcome for creditors than liquidation, or realise assets to pay secured or preferential creditors. Directors' powers are suspended; the administrator decides how the business is run, including whether to keep trading, sell assets, or arrange a sale of the business (a "pre-pack").
For a full walkthrough of what happens at each stage, read What Is Company Administration? A Director's Guide, or see the official gov.uk guidance on putting a company into administration.
Creditor protection and legal breathing space compared
Both routes offer legal protection from creditor action, but the strength and timing differ.
Administration triggers an automatic moratorium — a legal pause on creditor action — the moment the administrator is appointed. This stops winding-up petitions, legal claims and most enforcement action immediately, giving the company breathing space to stabilise.
A CVA doesn't carry an automatic moratorium unless a small company applies for one separately. Once a CVA is approved, though, it binds unsecured creditors to the agreed terms, stopping them pursuing the original debt outside the arrangement. Secured creditors are not bound by a CVA in the same way, which matters if a lender holds a charge over company assets.
Cost, timeline and disruption to trading
Administration is generally more expensive and more disruptive, reflecting the level of control the administrator takes on. Costs cover the administrator's time, statutory notices, and any restructuring or sale process, and are usually higher than a CVA because of the scope of the role.
A CVA is typically the less disruptive and more cost-effective option where the business is fundamentally sound but needs breathing space on debt. Broadly:
- CVA: proposal and creditor vote can be arranged within a few weeks; the repayment period then runs for several years, with trading continuing normally throughout.
- Administration: can be put in place very quickly, sometimes within days, but typically lasts up to 12 months initially and involves more upheaval to operations, staffing and supplier relationships.
Effect on directors and existing management
This is often the deciding factor. In a CVA, directors keep their roles and continue managing the company, subject to the agreed repayment terms and oversight by the supervisor. Staff, suppliers and customers may not even be aware a CVA is in place unless it's publicised.
In administration, directors' powers are suspended for the duration. The administrator can retain existing management to help run the business day to day, but ultimate decision-making authority sits with them. Administration is also publicly recorded at Companies House and noted in The Gazette, which can be visible to customers, suppliers and credit reference agencies.
Choosing based on cash flow, viability and creditor pressure
There's no single right answer — the difference between a CVA and administration usually comes down to three questions:
- Is the underlying business viable? Both routes assume the business can be rescued; if it can't, liquidation may be more appropriate.
- How urgent is the creditor pressure? If a winding-up petition or aggressive enforcement is imminent, administration's automatic moratorium offers faster, stronger protection.
- How important is director control? If keeping day-to-day management in place matters and creditors are willing to negotiate, a CVA may be the better fit.
These restructuring options for a UK company are rarely obvious from the outside, which is why an early conversation with a regulated insolvency practitioner — who can review your specific financial position — matters more than trying to self-diagnose the right route.
Frequently asked questions
Can a company do a CVA and then go into administration?
Yes. If a CVA fails or circumstances change, a company can subsequently enter administration. Sometimes administration is used first to stabilise the business, with a CVA proposed afterwards as part of the exit route.
Which option keeps me in control of my company?
A CVA keeps directors in charge of daily operations throughout, subject to the agreed terms. Administration transfers control to the administrator, though directors may still be involved in running the business under their direction.
Do I need to be insolvent to propose a CVA?
A CVA is generally proposed when a company is insolvent or heading that way but still has a viable underlying business. It's a rescue tool for companies that can trade their way out of debt with more time.
Will my staff and customers know if I enter a CVA or administration?
A CVA can often be managed with limited visibility to customers, since trading continues as normal. Administration is a matter of public record via Companies House and The Gazette, so it's more likely to become known.
How do I know which route suits my company?
This depends on your cash flow position, creditor pressure and whether the business is fundamentally viable. A regulated insolvency practitioner can assess your specific circumstances and advise on the most suitable route.
This article is general information, not legal, financial or insolvency advice, and shouldn't be relied on as a substitute for advice on your company's specific circumstances.
If you'd like to talk through whether a CVA, administration or another route fits your situation, Harbourfirst can introduce you to a regulated insolvency specialist — start an enquiry.