A CVA moratorium protects companies from any legal action being taken against them by creditors. This allows the company’s director’s time to prepare a CVA proposal and hold a creditor’s meeting so that creditors can vote to accept or decline the rescue plan.
A moratorium will only be granted if the company can prove that it has a realistic expectation of being able to put a CVA or other rescue package in place. The moratorium is intended to provide breathing space so the company can implement the rescue plan. This process is rarely used.