CVA vs administration — which route fits your company?
Both processes are designed to save value in a distressed UK company — but they work very differently. A CVA is a long compromise with unsecured creditors, run by the directors. Administration is a short, controlled process run by an outsider under legal protection. The right choice depends on time pressure, creditor mix and whether the business can honestly afford a plan.
Side-by-side
| Dimension | CVA | Administration |
|---|---|---|
| Who is in control | Directors, monitored by a Supervisor | Administrator — directors lose all powers |
| Moratorium | No automatic moratorium (a separate CIGA one can be layered on) | Automatic on appointment, freezing enforcement |
| Cost | Lower — Nominee fee + 8–12% Supervisor fee on realisations | Higher — sale-process fees, trading costs, detailed reporting |
| Speed to protect | Weeks — proposal, notice period, creditor vote | Days — appointment triggers moratorium immediately |
| Vote required | 75% by value + 50% unconnected | No vote — court or QFCH or director appointment |
| Binds secured creditors? | No, unless they consent | Yes, temporarily, via the moratorium |
| Binds preferential creditors? | No, unless they consent (HMRC almost never does) | Order of distribution respected in outcome |
| Typical duration | 3–5 years of payments | 3–12 months of process |
| Best when… | Business is viable, debt is manageable if stretched | Enforcement is imminent, or a sale is needed |
| Failure exit | Notice of Failure — often leads to administration | Move to CVL or dissolution |
A director's decision flow
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Frequently asked questions
Can I do both — a CVA inside an administration?
Yes. An administrator can propose a CVA as the exit route from administration. This combines the moratorium and control of administration with the long-term compromise of a CVA.
Which is cheaper — CVA or administration?
A CVA. It has no trading period run by an outsider, no sale process, and lower ongoing fees. But it only works if the business can afford the CVA payments on time.
Which returns more to creditors?
Depends on the business. A CVA usually returns more when the company can trade profitably going forward. Administration usually returns more when going-concern goodwill would be lost without an immediate moratorium.
Do directors get replaced in either?
In a CVA, no — directors stay in place, subject to Supervisor oversight. In administration, yes — the administrator takes over and directors' powers are suspended.
What if HMRC won't compromise?
HMRC's preferential VAT/PAYE/NIC claim (from December 2020) is outside any CVA unless HMRC votes in favour. If HMRC will not accept the deal, a CVA typically cannot fund the required payment — administration or liquidation becomes the realistic route.
Which is more public?
Both are public — filed at Companies House. Administration is filed daily and often reported in trade press; a CVA is filed and appears in The Gazette but is usually lower profile unless it's a large retailer.