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IVA Information
How does an IVA work?
In theory the legislation envisages that the Debtor drafts the IVA proposal for presentation to his creditors prior to instructing a Nominee, (who must be a Licensed Insolvency Practitioner), to review them before submission to court and then to the creditors.
In practice the Nominee draws up the IVA proposal upon the information provided by the Debtor and submits these to court with his comments on the merits of the proposals.
- The Nominee’s comments on the debtor’s proposals
- The Proposals
- Notice of the date and location of the meeting of creditors to vote on the proposals
- A Statement of Affairs this effectively being a list of the assets and liabilities of the Debtor
- A schedule advising creditors of the requisite majority required to approve the IVA
- A complete list of creditors
- A guide to the fees charged by the Supervisor following approval of the IVA
- A form of proxy for voting purposes
The creditors meeting is held not earlier than following 14 clear days notice after the above has been circulated to creditors. The purpose of the meeting of creditors is to agree or reject the Debtor’s proposals with or without modifications which can be requested by creditors at the meeting.
Acceptance of the IVA proposal requires 75% in value of those creditors who vote either in person or by proxy at the meeting. Please note that the 75% relates only to those who actually vote and assuming the creditors receive notice of the proposals, all will be bound by the terms of the arrangement whether they voted or not.
The meeting once it is being held can be adjourned for up to 14 days following the day of the meeting to enable agreements to be reached if modifications have been proposed which require negotiations.
Upon approval of the IVA, a Supervisor is appointed (usually the Nominee) to ensure the proposals are adhered to and to distribute the dividends to creditors.
Assuming the debtor complies with the terms of the arrangement, upon completion of the IVA he will be fully discharged from all liabilities included within it.
Pre-requisites for a successful IVA proposal
- The IVA must offer a higher return to creditors than could otherwise be expected were the Debtor to be made bankrupt.
- An honest declaration of your assets and/or anticipated future earnings should be made. Material or false declarations are likely to result in the subsequent failure of the IVA.
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