Brought in as part of Insolvency Act 1986~ Alternative to bankruptcy
Debtor comes to terms with creditors in a legally binding way.
Following petition for bankruptcy Court decides that IVA viable & makes Interim Order or
Debtor asks court to make Interim Order to stave off creditors actions
A nominated Insolvency Practitioner acts as Supervisor. In either case when Interim Order is in place the following procedures ensue;
Creditors meeting called - Debtor & nominated IP put proposal to creditors
Creditors receive proposal , statement of affairs , list of all creditors & duration of IVA~75% in value of all creditors must agree
If approved binding on all notified creditors & effective immediately
Date of commencement = date of meeting
There are 28 days to challenge the IVA.
Supervisor appointed at meeting usually by Debtors/Creditors recommendation and must be authorised IP.
IVA runs for stated period. If debtor fails to keep IVA - bankruptcy usually follows
1. Legally binding
2. Court Protection
3. Cheap as opposed to bankruptcy
4. Likelihood of better dividend to creditors
5. Reasonable balance between Debtor / Creditor
6. Flexible
7. any dividend
8. any period
9. Avoids heavy handedness
IVAs can work well for creditors where projections are accurate. Often in the LAs interest to agree.
Many IVAs seem to drag on just giving IP income, if this is the case the Creditor may raise matter with court. The Court will decide what is likely end result
Likelihood of bankruptcy
Likelihood of payment
Consider each IVA on merits
Debt up to date of IVA is frozen - They should be apportioned in line with Kaye v South Oxfordshire & Certain Exhibitions Limited
Attend creditors meeting & suggest local taxes paid as and when due
Employed individual with a house Valued at £80k Mortgage £20k
Scheme proposal
Remortgage home
Pay 100p in £ within 6 months
Scheme 'buys' time - · Better than bankruptcy
No assets but has a secure well paid job
Scheme proposal
Payments £200 monthly to nominee
Suitable interval say 6 months payment of dividend
Pay 30p in £ within 3 years
Scheme better than bankruptcy
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