An application
can be made to the Court for an Interim
Order where necessary. This has the
effect of preventing legal action
against the individual and his property
for a period of not less than 14
days from the date of the Interim
Order. In this time, the Nominee
considers the merits of the proposal
document and then has to report to
the court as to whether he considers
that a meeting of creditors should
be convened to consider, and vote
upon, the proposal. However, if the
Nominee helps to prepare the proposal
document on behalf of the individual,
his report as to whether or not a
meeting of creditors should be convened
is more often than not submitted
at the same time as the proposal
itself. This is known as a concertina
order.
The nominee
will then convene a meeting of creditors.
At the meeting if in excess of 75%
in value approve the proposal, the
Arrangement becomes binding on all
creditors who received notice of
the meeting. It is, however, not
possible to vary the rights of secured
creditors without their consent.
You are not legally required to attend
the creditor's meeting, but in practice
you should be there. Otherwise it
will be impossible to agree any changes
to the proposal. If last minute changes
are proposed, you should feel free
to ask for reasonable time to think
about them, If necessary, seek private
or separate legal advice outside
of the meeting about what is being
proposed.
After approval
of the proposal, the Supervisor will
implement the terms of the arrangement.
Who can
act as a Nominee/Supervisor?
Unless you are
a bankrupt when you make the proposal,
only an authorised Insolvency Practitioner
can act as a nominee or a supervisor
of an IVA. Nearly
always the person who acts as nominee
will also act as supervisor. Alternatively,
if you are a bankrupt at the time you
put forward the proposal, the Official
Receiver can act as a nominee and supervisor.
In that case you may be able to take
advantage of a simplified procedure
called a fast track IVA,
which does not involve a creditor's
meeting or allow the creditors to make
any changes to the proposal. It still
requires a 75% majority by value of
creditors to approve the proposal.
Are there
cases where a Voluntary Arrangement
cannot be justified?
Arrangements will
be difficult to justify where there
are few assets of value or where no
third party contribution is to be introduced
or where there are too little surplus
funds meaning there is little or no
prospect of a return to creditors.
Furthermore if creditors have reason
to suspect dishonesty or other irregularities,
then they may vote against the proposal
in order that the individual is subjected
to bankruptcy
proceedings.
What will
the Effect be on the individual?
The individual
will be bound by the terms of the arrangement
and provided he complies with these
obligations, he will be free from the
burden of his previous debts and will
be able to restructure both his domestic
and business life.
Duration.
The duration of
an Arrangement can and will vary dependant
on the circumstances of the individual.
However, usually an arrangement lasts
no longer than five years.
Fees and
Costs.
The proposal must
contain details of what will be paid
to the IP for acting as Nominee and
Supervisor. A separate fee is payable
for the IP's work in each of these
roles.
The nominee's
work will include helping with the
proposal, the necessary applications
to court to start the IVA process,
liaison with your creditors and holding
the creditor's meeting. The nominee's
fee will usually be a fixed sum, agreed
with you before he begins work on your
proposal. Sometimes the fee will be
split between work done as nominee
and work done before that stage, as
intended nominee.
The supervisor's
costs depend in part on the nature
of the proposal and what he needs to
do to implement the arrangement. In
all cases he must report the results
of the creditor's meeting to you, the
court and the creditors. He must also
issue annual reports to these people.
Sometimes he may have to do work that
was not foreseen in the proposal, for
example if a creditor takes a dispute
to court, if a lot of work needs to
be done to agree tax liabilities or
if you break your proposal's promise
to the creditors.
The supervisor's
fees may be stated as a fixed sum,
as a percentage of funds coming into
the arrangement, or by reference to
the time costs of the supervisor and
his staff. If the supervisor's fees
are fixed on a time-cost basis, they
will probably be stated in the proposal
as an estimate, rather than a binding
quotation, because no one can predict
future events with certainty.
What about
my credit rating?
Unpaid debts will
affect your creditworthiness regardless
of what legal process is used to deal
with the problem. However, if an IVA is
successfully concluded, that fact will
be recorded on any status report and
may be more favourable from the point
of view of any future credit provider.
It is your responsibility to ensure
your record is updated.
Should you want
to discuss an IVA or
need urgent advice call our advice
line on
0800 881 8879 (FREEPHONE) or
email us at: debtadvice@24-7finance.com
This is a confidential and free service.
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your the widest choice of financial resources.
Please visit one of our debt help links
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