COVID-19 Roadmap: Find out what you can and cannot do with the Guidance.
Home > Company News > R3 Standard Form CVA Proposals and CVA Standard Conditions

R3 Standard Form CVA Proposals and CVA Standard Conditions

Posted on: 20/07/2021

On Monday 12th July Insolvency Guru Malcolm Niekirk held one of his popular Coffee Break Briefing Webinars. In the free webinar, Malcolm looked at R3 Standard Form CVA Proposals and CVA Standard Conditions.

What is the R3 standard CVA and what was it designed for?

It is a collection of template documents made to make it easier to set up a CVA, in the cases for which those documents are suitable.
With the R3 standard template, there are no special rules or anything that makes it different from any other CVA and there are no special conditions for using it.
Essentially, what it boils down to is that somebody else has done a lot of drafting; so you don’t need to do as much!
It is not suitable for all cases and was drafted with a particular situation in mind, which is:

  • An owner managed business (SME)
  • Hit by temporary external factors
  • Has a profitable history behind it
  • And only needs time to pay back its debts in full

What is the R3 standard CVA template used for?

If accepted, it sets up a moratorium; a breathing space for a phased re-establishment of the business.

Phase 0 (optional) – re-opening – gives the business a short time to re-open (Typically 3 months)

Phase 1 – Breathing space – Business still trades, but it has a complete moratorium on historic debts(Typically 6 months)

Phase 2 – The settlement period – by now the business should be re-established and paying its creditors through the CVA(Typically 12 months)

Phase 3 – Dealing with the completion of the CVA and closure once the supervisor has enough funds to pay the creditor in full(Typically 3 months)

Approval to closure. (Typically 24 months)

What routes are there into the CVA?

Broadly speaking, there are two alternative routes into the CVA depending on whether the business is actually trading or whether it needs an introductory period in which to reopen, you can view a diagram of these routes in the full article.

There are some official and semi-official variations of this, in addition to the two possible opening phases. There are variations that deal with:

  • the business needing creditor protection in the form of an administration prior to the beginning of the CVA.
  • the business asking creditors to write off part of the debt owing to them.

The diagram for the variations can also be viewed in the full article.

Is a CVA the solution?

A CVA is a turnaround process – IPs need to think about how the business is going to operate when it is in a CVA
If you’re going to be the supervisor of a CVA and are depending on the continuing success of that business to generate the income from which to pay the creditors, then you owe an additional responsibility to understand what is changing about the business and how it is going to succeed.

Can the business move to a new place in three dimensions?

  • Finance
  • Management
  • Business


You’ll be looking at the working capital that’s available to the company – whether it’s enough – and whether the creditor indulgence that’s being offered through the CVA is enough.


Their ability, their credibility and what changes may need to be made to make the business succeed.

The business:

It’s immediate plans, what the medium plan and what the strategic objectives are.

Consider the creditors…


  • Unsecured creditors – 75% majority needed.
  • Unsecured creditors – Connected creditors cannot impose their will if most unconnected creditors who vote are in opposition.

Dividend offer

  • Unsecured creditors – remember Crown preference must be paid 100p/£.


  • Unsecured creditors – will key suppliers still support (on workable terms)?
  • Secured creditors – will they allow the company to remain in possession?

Creditor pressure

And, does the company need an immediate moratorium (administration)?
Other considerations…
Suppose the turnaround could work and the creditors will support the proposal in voting and implementation. There are other things that need to be considered:

  • Reputational issues (how damaged will the goodwill be; will customers remain loyal)?
  • Corporate complexity (potential knock on effects on other companies in a group)?
  • Might a pre-pack be easier?  (Or a ‘light touch’ administration?)

(Remember, of course, that you will need creditor approval, or an Evaluator’s report, for a connected-party pre-pack.  Get in touch if you need an Evaluator’s report; we are set up for preparing those.)

The full article is much longer, more comprehensive and includes useful diagrams as well as links to the R3 template and more useful stuff! The article can be read here.

Did you know, Dorset Chamber Members can submit news free of charge?

Submit your news

Most popular reads

Become a member

Become a Dorset Member today

Find out how

Business Training

Free Training to help businesses across Dorset provided by Dorset Chamber members

Some training opportunities are open to non-members

Find out more

Business Partners