Why CVAs remain relevant for mid-market restructurings

Against a backdrop of persistent inflation, elevated operating costs and cautious lending, businesses continue to face sustained trading pressure. While creditors’ voluntary liquidations (CVLs) dominate insolvency statistics, many mid-market businesses need a quicker, more proportionate tool.

For insolvency practitioners, this means mandates focused on stabilisation: preserving value, narrowing loss-making exposures and maintaining options. In these environments, proportionate tools that can be implemented quickly and defensively attract attention.

A company voluntary arrangement (CVA) allows a company to propose a binding arrangement with its unsecured creditors, enabling the business to continue trading. Creditors must approve the proposals and court involvement is limited unless the CVA is challenged.

The recent CVA launched by Franco Manca, a chain of pizza restaurants, in April 2026 underlines the continuing relevance of CVAs as a targeted restructuring mechanism for businesses under sustained pressure.

CVAs lost momentum following a series of high-profile retail cases that imposed disproportionate burdens on landlords, prompting increased scrutiny and challenge. Combined with perception of opportunistic use, this resulted in CVA deployment carrying greater reputational risk and stakeholder resistance.

Under section 4(3) of the Insolvency Act 1986, a CVA can’t affect a secured creditor’s rights to enforce its security, or the priority of preferential debts, without that creditor’s consent. CVAs also remain vulnerable to challenge on the grounds of unfair prejudice or material irregularity under section 6 of the Act, particularly where valuation evidence is thin or connected parties are left unimpaired.

However, the ‘modern’ CVA is rarely a comprehensive compromise of all unsecured liabilities. Instead, practitioners are deploying narrowly focused CVAs, most commonly targeting occupational lease exposure. These are typically paired with site rationalisation programmes, cost‑base reductions and parallel lender engagement.

The judicial framework

Courts assess CVAs by reference to the commercial strategy they support and the realistic alternatives available at the time of proposal. Recent case law shows a clear, outcome-driven approach, focused on commercial results rather than strict creditor rights.

In Discovery (Northampton) Ltd v Debenhams Retail Ltd [2019], the High Court confirmed that selective compromise of landlord claims is not, of itself, unfair where differentiation reflects commercial reality. Re New Look Retailers Ltd [2021] reinforced this principle. In Re Regis UK Ltd [2021], the court went further, upholding a CVA with landlord break rights triggered by future events and confirming that commercial pragmatism can justify interference with proprietary rights.

For practitioners, these decisions provide a workable framework for defending CVAs against challenge, particularly where proposals are well-evidenced and clearly explained.

When to use a CVA

While restructuring plans offer powerful cross‑class cramdown tools, they are often ill‑suited to mid‑market cases. Cost, evidential burden and execution risk can front-load expense and extend timetables beyond what trading businesses can tolerate.

CVAs, by contrast, are quicker and more cost‑effective. Court involvement is limited unless challenged and the evidential threshold is lower. For practitioners, they also offer flexibility in sequencing: binding fragmented unsecured creditors while lenders are managed consensually and operational change progresses in parallel.

Directors considering a CVA should take professional advice early. Once insolvency becomes probable, directors’ duties shift to creditors and continuing to trade without a reasonable prospect of avoiding insolvency may result in personal liability for wrongful trading. The decision to pursue a CVA should be carefully documented, with clear and consistent communication to stakeholders, including creditors, employees and key suppliers.

When not to use a CVA

CVAs aren’t a universal solution and should be avoided where the underlying problem can’t be addressed through targeted unsecured creditor compromise.

In particular, a CVA is unlikely to be appropriate where:

• The business is structurally insolvent, with no viable core to preserve

• The primary issue is overleverage requiring secured debt compromise

• There is no credible operational turnaround or cost reduction plan

• Key stakeholders (such as lenders, critical suppliers or HMRC) are unwilling to support or stand still

• The potential reputational impact would materially undermine the business model.

Conclusion and key takeaways

CVAs remain a valuable and underused tool in the mid-market restructuring toolkit, but they aren’t without risk. Their effectiveness depends on early engagement, robust valuation evidence and clear commercial rationale.

For directors, the decision to pursue a CVA should be taken on professional advice and carefully documented, particularly where insolvency is probable and duties to creditors are engaged. For insolvency practitioners, the lesson from recent case law is clear: a well-evidenced, narrowly targeted CVA, deployed with commercial pragmatism, is defensible.

Stakeholders considering whether a CVA may be appropriate should seek specialist advice at the earliest opportunity.