This chapter looks at the statutory arrangements that companies may voluntarily enter into to deal with troubles or adapt to changes in market conditions. The two main procedures for effecting voluntary arrangements either within or outside administration or liquidation are schemes of arrangement under section 425 of the Companies Act 1985 and Company Voluntary Arrangements (CVAs) as provided for in the Insolvency Acts of 1986 and 2000.

Before looking at these two methods, it should be emphasised that informal arrangements made contractually can, as noted in chapter 7, provide very useful ways of attempting rescues before there is need to resort to the formalities of section 425 or CVA provisions. Informal steps, moreover, may be taken confidentially and, in the international context, may provide a useful way of negotiating between different insolvency systems. Such contractual steps, however, possess a number of weaknesses. They are only binding on contracting parties and cannot tie dissenting parties to an agreement. They offer no form of moratorium to shield the company from its creditors and, even if approved by meetings of creditors and members, offer no protection from the enforcement of claims. Informal procedures may also lend themselves to domination by large secured creditors in a way unmatched by CVAs and section 425 processes.