Partnership Voluntary Arrangements (PVAs) can act as extremely useful methods of business recovery. They are similar to a Company Voluntary Arrangement (CVA), in that they seek to arrange a deal between a firm that is in debt and its creditors. As the name suggests, a PVA works for entities that are run as a partnership.

If your business is struggling financially, but you believe it is still a viable operation, PVAs can be a vital tool to help you not only fight for survival, but also restructure your organisation to make it fit for the future. That being said, the Partnership Voluntary Arrangement procedure is far from easy.

This is why it is essential to seek expert guidance at your earliest opportunity. By working with a business recovery specialist from the outset, you can ensure that every minute detail is taken care of.

What is a Partnership Voluntary Arrangement?

A Partnership Voluntary Arrangement is a formal agreement between a struggling business and its unsecured creditors to pay back a proportion of its debts. It runs on the basis that agreeing to these proposals will be more beneficial for the creditors than allowing the indebted firm to go into liquidation, while also preventing any action being taken against the debtor. 

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PVAs can grant struggling businesses much-needed breathing space to restructure and reorganise their operations, with the partners remaining in control. For creditors, they represent an opportunity to recoup a larger proportion of what they are owed, and gives them some peace of mind that they will mitigate some of their losses.

If a partnership is experiencing a short-term cash flow issue, but remains a viable entity, the PVA will allow for a business to trade its way out of danger. Additionally, the method also gives the business an opportunity to sell off potentially valuable assets to raise a lump sum of working capital.

The most important thing to remember with a PVA is that your partnership must be a viable entity to proceed. If it isn’t, your best course of action may be liquidation. 

The Partnership Voluntary Arrangement Procedure

There are many complicated steps to setting up a Partnership Voluntary Arrangement, such as carrying out an initial assessment, creating a proposal, and getting it approved by creditors. If you are ever unsure about any of these obligations, a licensed insolvency practitioner and business turnaround expert should be your first port of call. 

While this may seem like a monumental task, the reality is that an insolvency practitioner will be able to take care of the majority of the heavy lifting for you. Here is what goes into a PVA:

Initial Consultation

As soon as the partners decide that they need to take action, they should contact a licensed insolvency practitioner (IP) to arrange a preliminary consultation regarding their situation. It is during this meeting that the IP will discuss the various options available to the struggling business, and whether a PVA is the best course of action to take.

You will need to come to this meeting prepared, as it is necessary for the IP to have information such as how your partnership is structured, your trading history, and details of how you came to be in your current predicament. It is also necessary to bring details regarding your firm’s assets and liabilities, plus a projection for the short and long-term future of the business. 

During the consultation, the IP will give their professional opinion on whether a PVA is likely to be accepted by your creditors. 

Creating a Proposal

Once a PVA has been agreed upon in principle, the next step is for the business to appoint an insolvency practitioner in the role of “Nominee”. Their first task is to draft a proposal, alongside a statement of assets and liabilities.

laptop and pen to write a proposal for partnership voluntary arrangements

The report will outline how exactly a partnership intends to utilise a PVA to its advantage. Examples of this include:

  • Reducing overheads
  • Improving efficiency
  • Staff redundancies
  • Improving long-term viability

As you would expect, a PVA proposal will also detail how much creditors can expect to receive, how long the arrangement will last for (typically between three-to-five years), and how the funds are to be distributed. This should be based on sensible forecasts of cash flow, costs, and sales. It is essential not to over-promise anything, as this can have a serious knock-on effect if you end up being unable to keep up your end of the bargain. 

The final aspect of a  proposal is a Statement of Affairs, which will paint a picture of your firm’s financial position. It intends to outline what the outcome would be for your creditors if you are forced into liquidation, as compared to the PVA. 

Once drafted, the proposal will need to be ratified by the partnership.

Preparing a Nominee’s Report

Part three of the procedure is the production of a Nominee’s Report. This is where the IP offers their opinion on whether the proposals have a reasonable chance of being accepted by creditors.

Once complete, the Nominee will serve notice to all of the partnership’s creditors to call a special meeting to discuss the proposals. At this point, the Nominee writes to the court stating their belief that the PVA has a reasonable chance of being approved. A date for the meeting of creditors is then set.  

Approval From Creditors

During the creditors’ meeting, it is necessary for at least 75% (by value of debt) of those entitled to vote are in favour of the proposals going ahead. If this doesn’t happen, a PVA cannot be approved and an alternative course of action will need to be sought. 

It is also possible for creditors to request amendments to the proposals should they see fit. Provided the proposals have been prepared with sufficient care and attention, this may not be necessary.

Once the PVA has been approved by the required number of creditors, the members of the partnership will convene their own meeting with shareholders to discuss whether they wish to proceed with the proposals, and to consider any amendments the creditors may have demanded. At least 50% of those in attendance must be in favour for the process to continue. 


Partnership Voluntary Arrangements come into effect as soon as the creditors and partners have approved the proposals. From this point, no action can be taken against the indebted company — provided it adheres to the terms of the agreement at all times. 

green traffic light to signify the commencement of partnership voluntary arrangements

The partnership will now be expected to make the agreed contributions to its creditors as set out in the proposal. These payments are sent to the Supervisor of the PVA and held in a designated trust account and distributed to creditors. 

Creditors are legally bound and unable to make any further demands of the partnership for the duration of the PVA. That being said, additional procedures may be necessary if any of the partners’ assets are at risk from personal creditors.

Each year, the Supervisor will be tasked with reporting back to creditors about the progress of the PVA. This should outline the trading performance of the partnership since the agreement was made, how much has been recovered, and how much has been transferred to creditors. 

Should the indebted business find itself unable to meet its obligations at any point, it may be possible for the Supervisor to arrange payment breaks. This could require further approval from creditors via a series of ‘variation meetings’. 

Exiting a PVA

Once a PVA comes to an end, the Supervisor will issue a Certificate of Completion. This will allow the partnership to operate without the threat of additional insolvency proceedings taking place.

Should the indebted business be unable to uphold its side of the agreement, or breach the PVA in any way, the agreement will be terminated. If this happens, the only likely option left will be liquidation.

Need Partnership Voluntary Arrangement Advice? Contact Inquesta Today

If your partnership is struggling financially, it is essential that you do not make any rash decisions. Instead, you should seek specialist assistance from a licensed insolvency practitioner and business recovery expert at your earliest opportunity. This is something that Inquesta excels in. 

We have amassed decades of experience in helping companies in financial distress to turn their fortunes around and enjoy a successful future. Our team are specialists in all forms of corporate recovery and insolvency, and will work with you to determine the best course of action to suit your individual circumstances  — whether it be a partnership voluntary arrangement or something else entirely. 

Going through financial difficulty is an incredibly difficult experience for any business owner, and Inquesta understands this. As such, we work with your best interests at the forefront of everything we do — providing much-needed peace of mind for you.

To find out more, contact a member of our team or book a free, no-obligation consultation.