There are two types of voluntary insolvencies, a Company Voluntary Insolvency (CVA) or an Individual Voluntary Insolvency (IVA), for insolvent companies and individuals respectively. In both cases, these agreements exist to help the insolvent party avoid the painful process of liquidation or bankruptcy proceedings. This is achieved through a specific payment plan agreement between the insolvent party and its creditors, allowing the company or individual to repay its debt over a set time period, mediated, managed and overseen by an Insolvency Practitioner.
The advantage of such an arrangement is that, provided the creditors agree to the arrangement, the insolvent party is, in essence, given some breathing room whereby they can continue to operate and retain control of their operations, provided they continue to repay their debts as per the agreement.