1. The Role of the Nominee and Application of Professional Judgement The Service monitoring teams have encountered a number of instances where the nominee appears to have acted merely as a post-box for the proposal, and not queried the information presented. It is considered that such actions result in a high percentage of arrangements failing either at the first meeting of creditors or following approval. The nominee must ensure that the proposal meets the criteria set out in the legislation, but that is not sufficient reason to conclude that the proposal is fit to be put to creditors: the practitioner must also use professional judgement in deciding whether or not the proposal is feasible. Under Section 256 of the Insolvency Act 1986 it is the duty of the nominee to report to court on whether in his opinion a meeting of creditors should be summoned to consider the debtor's proposal. The clear implication is that as nominee you will consider the proposal, and make such enquiries as you consider necessary to satisfy yourself that the proposal ought to be put to creditors. For instance, the nominee’s right of access, under Rule 5.9 (3), to the debtor’s accounts and records, is there to be exercised, and was provided for that purpose. Case law has reinforced this view, i.e. that the nominee must go further than merely ensuring that the proposal contains the matters required by the legislation. In Re a debtor (No 222 of 1990) it was held that a nominee in making his report to court, and acting as chairman of the meeting of creditors has a duty (arising from section 256) to exercise a professional independent judgement. That this judgement is required of an authorised insolvency practitioner, emphasises that the court requires a report from a qualified person, skilled and experienced, who is exercising his professional judgement as to whether the matter is, in his opinion, fit to go forward for consideration by the creditors. In relation to each and every arrangement the Service would ask practitioners to consider the following:
(First published in Dear IP no. 33. March 1995) 2. Failed Individual Voluntary Arrangements (IVA's) Monitoring by the Service has highlighted the difficulty faced by some supervisors when an arrangement has failed. In several instances the proposal has failed but no further action has been taken to resolve the matter. The set functions undertaken by the supervisor under the proposal should include any actions he is to take should the arrangement be deemed to have failed. The Service is aware that the scope for action when an arrangement fails can be limited by lack of funds. However, in Re a debtor (No 222 of 1990) No 2, it was held that a supervisor must take some positive action if it appears that an arrangement is failing, either in accordance with the provisions of the proposal, or, where there are no such provisions, by seeking directions from the court, or petitioning for a bankruptcy order. Monitoring has also revealed that not all practitioners are aware of their duty to notify the Secretary of State when an arrangement has failed. When notifying the Secretary of State it would be appreciated if you could indicate what further actions you intend to take as supervisor, e.g. in respect of petitioning for bankruptcy. (First published in Dear IP no. 33, March 1995) 3. IVAs - Notices to the Official Receiver and the Secretary of State (First published in Dear IP no. 30, March 1994) Article Withdrawn December 2006 4. Modification of Court Jurisdiction It has been drawn to our attention that it is becoming increasingly common for terms to be inserted in proposals for individual voluntary arrangements which seek to exclude or vary the jurisdiction of the Court. Practitioners are reminded that any conditions seeking to exclude or vary jurisdiction will be void as being contrary to public policy, and accordingly should not be included in proposals. (First published in Dear IP no. 34, October 1995) 5. Notification to Secretary of State Regarding IVAs (First published in Dear IP no. 34, October 1995) Article Withdrawn December 2006 6. Position of Preferential Creditors Practitioners are reminded that section 4(4) and 258(5) of the Insolvency Act 1986, provide that a meeting of creditors may not approve a proposal or modification which affects the rights of a preferential creditor without the approval of that preferential creditor. HM Customs and Excise has informed the Service that in an increasing number of cases the proposal approved by creditors purports to affect Customs rights as preferential creditor, without approval, Customs will consider making an application to court, and reporting the matter to the practitioners authorising body, where the provisions of these sections have not been observed. (First published in Dear IP no. 24, November 1992) 7. Receipts of Funds by Trustees Prior to an IVA Where an individual voluntary arrangement (IVA) is proposed following the appointment of a trustee in bankruptcy, the trustee, acting as such, is still required to pay the proceeds of asset realisation into the ISA under Regulation 20 of the Insolvency Regulations 1994. These proceeds will attract the Secretary of State fee, which will not be rebated when the bankruptcy is subsequently replaced by an IVA. Practitioners will wish to bear this in mind when formulating proposals for an IVA. (First published in Dear IP no. 35, April 1996) 8. Individual Voluntary Arrangements following a Bankruptcy Order – Discharge of Official Receiver’s Costs – Rule 5.21 of The Insolvency Rules 1986 In bankruptcy cases where an individual voluntary arrangement (IVA) is subsequently approved, Rule 5.21 of The Insolvency Rules 1986 provides that the supervisor must either discharge any balance due to the OR in respect of fees, costs, charges and expenses properly incurred, or give the OR a written undertaking to discharge any such debit balances out of the first realisation of assets. Generally, no provision is made in the bankrupt’s proposal to creditors for the discharge of the OR’s costs as there is no mandatory requirement to do so under Rule 5.3, nor is it covered by current best practice guidance. Nonetheless, IPs are requested to consider including such provisions in any proposal prepared on behalf of a bankrupt, given the statutory requirement to discharge the OR’s costs. IPs should also be aware that Insolvency Practitioner Compliance Unit have responsibility for recovery of the OR’s costs from the supervisor in cases where the bankruptcy order is annulled following the approval of the IVA. Contact: Jane Knight, Insolvency Practitioners Control Unit, 5th Floor, Ladywood House, 45/46 Stephenson Street, Birmingham B2 4UZ. Tel: 0121 698 4098 (First published in Dear IP no. 46, July 1999) 9. Individual Insolvency Register - request for searches (First published in Dear IP no. 47, October 1999)Article Withdrawn December 2006 10. Individual Voluntary Arrangements – Reports of the Creditors Meeting to the Court and the Secretary of State in compliance with Rules 5.22 and 5.24 of the Insolvency Rules 1986 (First published in Dear IP no. 34, October 1995) Article Withdrawn December 2006 11.
Individual Voluntary
Arrangements – reports of the creditors’ meeting to the Secretary of
State in accordance with rule 5.24 of the Insolvency Rules 1986. Article Withdrawn December 2006 12.
Individual Voluntary Arrangements – notification of the completion or
termination of the arrangement to the Secretary of State as required by
rule 5.29 of the Insolvency Rules 1986 (as amended). Article Withdrawn December 2006 13. CVA VOTING PROCEDURE – RULE 1.19, REQUISITE MAJORITIES (CREDITORS) An issue has arisen regarding the
application of rule 1.19(4) of the Insolvency Rules 1986 rendering a
resolution invalid at a meeting of creditors in a CVA.
Rule 1.19(4) states that “any resolution is invalid if those
voting against it include more than half in value of the creditors,
counting in these latter only those – a)
to whom notice of the meeting was sent; b)
whose votes are not to be left out of account under [
rule1.19(3)]; and c)
who are not, to the best of the chairman’s belief, persons connected
with the company.” The point at issue is the meaning
of “creditors” in the context of the phrase “more than half in value
of the creditors”. Our view
is that the reference to rule 1.19(3) implies that the creditors for the
purpose of the calculation are:(a)
unsecured; (b)
have been given notice of the meeting; (c)
have given written notice of their claim to the chairman, and
(d)
he/she does not believe them to be connected with the company. Enquiries arising from the above
should be addressed to Gareth Limb, Insolvency Practitioners Compliance
Unit, The Insolvency Service, 5th Floor, 45 Stephenson Street,
Birmingham, B2 4UZ. Tel: 0121 698 4105. e-mail: gareth.limb@insolvency.gsi.gov.uk. 14.
INDIVIDUAL VOLUNTARY ARRANGEMENTS
–
Registration of an arrangement with the Secretary of State as required
by rule 5.24, 5.25 and 5.29 of the Insolvency Rules 1986 (as amended). Article Withdrawn December 2006 15.
Advertising of Individual Voluntary Arrangements The
Insolvency Service has received a number of enquiries recently regarding
the advertising of Individual Voluntary Arrangements (IVAs).
The enquiries have originated from individuals who entered into an
IVA and who were under the impression that the IVA would not be
advertised. The
IVA information held by the Insolvency Service is a public record and is
currently available for public inspection, by way of either a written
request or in person at an Official Receiver’s office. Whilst
there is no statutory provision for the advertisement of IVAs, the present
position of the Insolvency Service is to provide information from the IVA
register direct to three credit organisations.
The list of names are added to the credit organisations’
databases, and made available to their members, which include banks and
lenders. Information is not
made available to the general public, but individuals can request details
that are held about themselves. 16. Registration of Individual Voluntary Arrangements (IVAs) Article Withdrawn December 2006 Enterprise
Act (Individual Insolvency Provisions) 17.
Fast Track Individual Voluntary Arrangements 1.
A new fast track Individual Voluntary Arrangement (IVA) procedure is
introduced, where the debtor is an undischarged bankrupt and the official
receiver acts as nominee. The intention is to provide a quicker and more affordable
procedure for straightforward cases, and for this reason creditors will
not be able to make modifications to a proposal, and voting as to whether
to accept or reject it will be on paper. 2. If creditors approve an IVA where the debtor is an
undischarged bankrupt, then the court must annul the bankruptcy order on
an application by the debtor or the official receiver. This is designed to
avoid uncertainty in cases where the bankrupt makes no application for
annulment. 3. There will be transitional provisions, which will cover existing first and second-time bankrupts, and the family home provisions for existing cases. The details are shown at the relevant point of the guidance notes. 4. The main changes to the revised and expanded Part 5 of the rules are:
5. Annulment Following Approval of IVA Proposal The
rules governing the procedure for annulment of a bankruptcy order
following approval for an IVA have now been placed more logically within
Part 5. The provisions under
rules 6.212A to 6.214 are amended to remove reference to applications on
these grounds. The expanded Part 5 rules cover annulments made:
In all of the above, provision is made for vacation of the register of writs and orders, for substituting a representative for a deceased bankrupt where applicable and for the trustee’s release following annulment (rules 5.60 to 5.61).
Enquiries arising from the above should be addressed to Steve Quick, Director of Policy. Tel: 020 7291 6747.
18. E C Provisions The EC Provisions are moved without amendment to Chapter 12 (rules 5.62 to 5.65). The addition of paragraph (4) to rule 6.83 is made to
disapply meetings requisitions to fast track voluntary arrangements. Enquiries
arising from the above should be addressed to Steve Quick, Director of
Policy. Tel: 020 7291 6747. 19.
Individual Voluntary Arrangements – Termination Article Withdrawn December 2006 20.
Company Voluntary Arrangement (CVA) Moratorium Procedure As
from 30 January 2004 more companies were eligible for the CVA moratorium
procedure. One
of the qualifying conditions for eligibility for a moratorium under
Schedule A1 to the Insolvency Act 1986 (see paragraph 3(2) of the
schedule) is that the company must satisfy two or more of the requirements
for being a small company specified for the time being in
section 247(3) of the Companies Act 1985 (as amended).
As the financial limits in section 247(3) have recently been
changed, those new levels will automatically apply where the directors of
a company wish to obtain a CVA moratorium on or after
30 January 2004. The
new limits are:
The
changes were brought about by the Companies Act 1985 (Accounts of Small
and Medium-Sized Enterprises and Audit Exemption) (Amendment) Regulations
2004 (SI 2004/16). Any enquiries arising from this article should be directed to Richard Favier, Tel: 0207 637 6421 21. Review Of The Individual Voluntary
Arrangement Process On 19 July 2004, the
Insolvency Service hosted a forum to discuss Individual Voluntary
Arrangements (IVAs) attended by a wide range of stakeholders. From the opinions expressed at the forum, there appears to be
a consensus that a re-examination of the individual voluntary arrangement
process is overdue, particularly in the case of so called “consumer”
debtors. The forum was very
useful for generating a general debate on IVAs but such an approach is too
cumbersome for more comprehensive examination of the relevant issues. Therefore the Insolvency Service has set up a smaller working
group, representing a wide range of stakeholders, to examine in detail the
possible reform of the IVA process. The working group met for the first
time on 21 September 2004 and the members are: John
Fairhurst of Payplan Andrew
Redmond of Debt Free Direct Peter
Hughes Holland of Numerica Charles
Howson of Accuma Beverley
Budsworth of Budsworth & Co Pat
Boyden of PWC Steve
Treharne of KPMG Charles
Rusbasan of Max Recovery Ltd Euan
McPherson of HBOS Nick
Pearson of Advice UK Jan
Smith of CCCS The
Insolvency Service would be pleased to receive views or comments on the
IVA process to assist with the review.
Any such comments should be directed to Tracy Stanhope (contact
details below). Any enquiries arising from this
article may be directed to Tracy Stanhope, Section Head, Policy Unit, PO
Box 203, 21 Bloomsbury Street, London
WC1B 3SS;telephone: 020 729 6734; email: Tracy.Stanhope@insolvency.gsi.gov.uk 22. New Procedure
for Acknowledgement of IVA Submissions Practitioners
are aware that the Insolvency Practitioner Unit based at Ladywood House,
45/46 Stephenson Street, Birmingham, B2 4UZ, has the Secretary of State’s
delegated responsibility as Registrar of Individual Voluntary Arrangements
(IVAs). In
view of the increasing numbers of IVA registrations received from
Practitioners, the Unit will in future provide a schedule to Practitioners
at the beginning of the month listing the IVAs received from them for
registration in the previous month. This
is a change from the arrangement hitherto of acknowledging each IVA
submission individually on receipt. The
new procedure will begin in January 2005. Any enquiries arising from this article should be directed towards Joe Clogan, Head of Insolvency Practitioner Unit, 5th Floor, Ladywood House, 45/46 Stephenson Street, Birmingham B2 4UZ; telephone 0121 698 4105; e-mail: IPU.Email@insolvency.gsi.gov.uk NB Article 24 replaces that issued in March 2005 which is now withdrawn; for ease of reference the whole page has been re-issued. 23. IVA Submissions Insolvency practitioners are aware that the Insolvency Practitioner Unit based at Ladywood House, 45/46 Stephenson Street, Birmingham, B2 4UZ has the Secretary of State’s delegated responsibility as Registrar of Individual Voluntary Arrangements (IVAs). Part of that responsibility is to ensure the IVA Register is kept up to date. A recent review of the Register has shown that it is not accurate. There have been instances where arrangements have failed or completed without the Unit being advised, some arrangements remaining on the Register for over 10 years. In order to bring the Register up to date, insolvency practitioners are requested, as a priority, to update their own lists, and advise the Unit accordingly. Additionally, there have been instances where the Unit has removed an arrangement from the Register following receipt of a Certificate of Non-Compliance or notice that a debtor is in default, to subsequently receive confirmation from the insolvency practitioner that the IVA has completed or is continuing and should be restored. Insolvency practitioners are reminded of the guidance given in Issue 17 of Dear IP, that it is the responsibility of the Supervisor, or indeed the debtor or a creditor, to apply to Court for a decision that the notice was incorrectly filed and that the arrangement continues. Any enquiries regarding the above should be directed towards Joe Clogan Insolvency Practitioner Unit, 5th West Ladywood House,45/6 Stephenson Street, Birmingham B2 4UZ; telephone: 0121 698 4105 email: Joe.Clogan@insolvency.gsi.gov.uk 24. IVA Registration Insolvency practitioners will be aware that in accordance with the Amendment Rules, Individual Voluntary Arrangements will in future include details of the debtor’s gender, date of birth and any name by which the debtor was known, not being the name in which they entered the IVA. Insolvency Practitioner Unit is issuing a new form, which will standardise Individual Voluntary Arrangement (IVA) registration and incorporate new legislative changes. Insolvency practitioners should note that it is not necessary to enclose a copy of the proposal when registering the IVA. To expedite registration and to prevent the need for further referral, insolvency practitioners are requested to complete all available boxes including gender, and aliases, if any, together with their insolvency practitioner number. The new form is available as an attachment to this article and should be used with immediate effect. Termination Pursuant to Rule 5.34(3) insolvency practitioners are required to send to the Secretary of State a notice that the arrangement has been fully implemented or (as the case may be) terminated. Supervisors are reminded that legal advice was sought on termination and the guidance to be followed is given in article 19 of this chapter which provides the Secretary of State will remove an arrangement from the Register only on receipt of a specific notice of completion or termination and will disregard any notices referring to non- compliance or default by the debtor. For the avoidance of doubt, the Unit will remove an arrangement only on receipt of a notice from the practitioner that includes a reference to Rule 5.34(3). Any enquiries regarding the above should be directed towards Joe Clogan Insolvency Practitioner Unit, 5th West Ladywood House,45/6 Stephenson Street, Birmingham B2 4UZ; telephone: 0121 698 4105 email: Joe.Clogan@insolvency.gsi.gov.uk
25. Review of the
Individual Voluntary Arrangement Process In
Issue 20 of Dear IP (and the cover of Issue 22), subscribers were
informed of the setting up of a stakeholder working group to examine, in
detail, the possible reform of the IVA process. The
working group has since met on five occasions and its report, summarising
its findings, conclusions and recommendations on improving IVAs was issued
in July. The report and response form (to be returned by 7
October 2005) can be accessed on http://www.insolvency.gov.uk/insolvencyprofessionandlegislation/con_doc_register/liveindex.htm Any enquiries regarding the above
should be directed towards Andy Woodhead, Policy Unit, 21 Bloomsbury
Street, London WC1B 3SS, telephone: 020 7291 6738 email: Andy.Woodhead
@insolvency.gsi.gov.uk 26. IVA registration, completion or failure As many of you will know, at the
end of January 2005 the Service embarked on a major data cleansing
exercise. This was to check the status of old IVAs on the Electronic
Individual Insolvency Register (E.IIR). This is now completed and with
your help we have removed some 2640 of the 3400. As a result The
Insolvency Service is now able to provide an accurate public register and
therefore, I would like to take this opportunity to thank all of you that
either personally or with the help of your staff gave my colleague Anne
Crabbe the information we needed to clear the cases. In order to safeguard the future
integrity of the information held on the E.IIR, the Insolvency
Practitioner Unit has increased resources to introduce the role of IVA
Registrar. The Registrar will operate an ongoing system of IVA
verification by providing Practitioners periodically with lists of
arrangements over a certain age and seeking confirmation of their current
status. In addition the Unit has revised
its IVA registration, completion and failure process. In future, incomplete applications will be returned to the
Practitioner with an appropriate explanation without being registered. Similarly, a notice of IVA
termination/completion that does not include a reference to the
appropriate Rule will be returned without action.
Instances of registration
applications more than ten days after the filing of the Chairman’s
report to Court or notices of completion or termination notified more than
28 days after the event will be referred, following notice, directly to
the Practitioner’s RPB. Against a background of increasing
IVA registrations the Unit is experiencing particularly high volumes of
multiple registrations from individual Practitioners. Traditionally each
registration is accompanied by a cheque for the appropriate amount (£35)
together with a copy of the Unit’s standard registration form providing
the necessary information. In
order to maintain the Unit’s 24 hour registration service, Practitioners
submitting multiple registrations are required in future to provide the
requisite information on one document, for example by way of a spreadsheet
format to include all the information required on the registration form,
together with a composite cheque for the total value of registrations.
Any enquiries regarding the above
should be directed to Joe Clogan at Insolvency Practitioner Unit Ladywood
House, 45-46 Stephenson Street, Birmingham, B2 4UZ email: joe.cloganl@insolvency.gsi.gov.uk 27. Review of the Individual Voluntary Arrangement Process Article Withdrawn December
2006 28.
Review of the Individual Voluntary Arrangement Process In
Issue 25 of Dear IP, subscribers were informed of the closing date for
responses to the stakeholder working group report “ Improving Individual Voluntary Arrangements”. Those
responses have now been analysed and a summary of those responses along
with the Government Reply has been placed on our web site and can be
accessed on the following link http://www.insolvency.gov.uk/insolvencyprofessionandlegislation/con_doc_register/registerindex.htm 29. Authorisation
of Voluntary Arrangement nominees and supervisors Section 389A of the Insolvency Act 1986 (which was added by the Insolvency Act 2000) allows the Secretary of State to recognise bodies to authorise their members to act as office-holder in Voluntary Arrangements. Applications for recognition have recently been received from the IPA and the ICAEW and these are being processed. If the applications are successful it is likely that members (who may not be insolvency practitioners) of those bodies who are fit and proper persons to act as nominee and supervisor and who meet acceptable requirements as to education and practical experience and training may take appointments as Voluntary Arrangement Practitioners in 2007. 30.
Joint or interlocking Individual Voluntary Arrangements The
Secretary of State has become aware that insolvency practitioners have
been setting up joint, or inter-locking individual voluntary arrangements
(“IVA”) for consumer debtors (typically a husband and wife) where some
or all of the debts are joint debts of the parties, and where one monthly
payment is made under the terms of the proposal towards the payment of
their debts. Legal advice has
been sought on whether it is possible in law to have a joint IVA, and
whether IVAs approved by a joint resolution of both sets of creditors are
valid. Joint IVAs The
presumption of the law is that unless expressly prohibited, or prohibited
by necessary implication, a proposal for an arrangement can include any
terms. The onus is on the creditors to determine whether the terms of the
arrangement offer them a better return than the bankruptcy of the debtor.
Safeguards are built into the Act to ensure that those who consider that
they are suffering unfair prejudice may challenge an arrangement.
Any arrangement that does not provide for equal treatment runs the
risk of challenge, but is not per se invalid. The
view of the Secretary of State is that Individual Voluntary Arrangements
are just that, and that there is no provision within insolvency
legislation for joint IVAs. This
note does not address the situation of partnerships which are covered by
the Insolvent Partnerships Order 1994. Where there is a proposal that
purports to be a joint arrangement it is in fact likely to be regarded in
law as two separate arrangements. Accordingly,
the Secretary of State considers that where two linked consumer debtors,
such as a husband and wife, are considering setting up IVAs, the following
points should be borne in mind:
o
If a joint monthly
contribution is to be received from both debtors, the proposals should
make it clear how that contribution is to be split between the two
debtors. o
If each Voluntary
Arrangement is to be dependent upon the success of the other, this should
be made clear within the proposals, and the effect of failure of one IVA
on the other must be clear. o
The estimated outcome
statement should only contain information relating to that debtor – i.e.
it should not include debts or assets that belong to the other party. o
The proposals should be
clear on how dividend payments will be calculated, and how this will
affect each individual class of creditor.
Existing IVAs In
respect of existing arrangements (whether still current or now closed)
where there has been a joint resolution of creditors, and there have been
payments under the arrangements to creditors, and everyone has acted on
the basis that the arrangement is valid, it is the Secretary of State’s
view that it is unlikely that a court would overturn such arrangements.
In coming to this view the Secretary of State has taken cognisance
of the following:
As part of The Service’s ongoing evaluation function, we would be grateful to receive written representations from any stakeholders who feel that there would be real benefits to debtors and creditors if the law were to be amended to make specific provision for joint IVAs. Any representations made should set out reasons and, where possible, provide examples of potential benefits. Representations can be forwarded to Mike Norris, Director of Policy at mike.norris@insolvency.gsi.gov.uk Any
enquiries regarding this article should be directed towards Catherine
Collinson telephone: 0121 698 4098 email:
Catherine.collinson@insolvency.gsi.gov.uk 31.
Review of the Individual Voluntary Arrangement Process In
article 28 of this chapter (Dear IP March 2006 no.26), insolvency
practitioners were informed that a summary of responses to the
consultation document, “Improving Individual Voluntary Arrangements”,
with the Government Reply, had been published.
Insolvency
practitioners should note that on 8 May 2007 the latest proposals for
change were published in “A consultation document on proposed changes
to the Individual Voluntary Arrangement (IVA) regime contained in the
Insolvency Act 1986 and associated matters”. The closing date for
responses to the consultation is 3 August 2007 and both documents can be
accessed here. Any enquiries regarding this article should be directed towards Maria Isanzu, Policy Unit, Area 5.7, 21 Bloomsbury Street, London WC1B 3QW; telephone: 020 7291 6761 email: maria.isanzu@insolvency.gsi.gov.uk 32.
The IVA Forum and Plenary Session On 17
January 2007 The Insolvency Service and the British Bankers Association (BBA)
co-hosted a forum on Individual Voluntary Arrangements (IVAs) attended by
representatives from creditors, IVA providers, debt advisers and
regulators. The forum resulted in four working groups of interested
parties being set up to examine key aspects of the IVA process, including:
·
The treatment of the debtor’s
income and expenditure ·
The treatment of the debtor’s
home ·
Advertising IVAs and
information to be provided to the debtor when seeking debt advice ·
Due diligence and fees ·
A suggested standard IVA
proposal and terms and conditions Each of the working groups issued a report, which
were discussed at a Plenary Session of the IVA Forum on 31 May 2007 where
there was an opportunity for further comments to be made and views
expressed. One of the
principal objectives of the Forum was to finalise a protocol, initially
drafted by the BBA. This protocol will be
applicable to “straight-forward, consumer-based IVAs”, the
conditions of which include:- ·
The necessity for the debtor
to have a regular income ·
The need for there to be 3
or more lines of credit, and 2 or more creditors ·
Home equity: suitable for
homeowners and non-homeowners ·
No age constraints and no
minimum or maximum thresholds Although
adherence to the protocol will be voluntary, it will be based on trust and
goodwill among all parties to ensure compliance. Copies of
the latest draft of the protocol can be obtained from Andy Woodhead at the
email address below or from The Insolvency Service website. An “IVA
Standing Committee”, chaired by The Insolvency Service, will be set up
to act as a forum for stakeholders to discuss the IVA process in the long
term. However, in the short
term it will be the vehicle for finalising the protocol, the standard
terms and conditions and the standard IVA proposal and considering how
best to take forward the provision of market information on IVAs. Once the IVA
Standing Committee has a finalised version of the documents then they will
be placed on The Insolvency Service website, with a short opportunity
for further comment. The
constitution of the IVA Standing Committee is currently being considered. ·
Given the broad agreement on
many issues the Plenary Session concluded by agreeing an action plan which
sets out a number of key target dates for progression or completion of the
recommendations. The
working group reports, notes of the 31 May Forum, the draft BBA standard
IVA protocol and progress on various IVA issues can be accessed here. 33.
New e-mail registration facility Following
the recent introduction of a new system of registering Individual
Voluntary Arrangements, many practitioners will be aware that the
Insolvency Practitioner Unit now has the facility to automatically upload
lists of IVA registrations submitted by email.
The new system will enable IPU to maintain its present service of
registering arrangements within 24 hours of receipt of the appropriate
fee. Success of the new
system relies on practitioners and their cashiers using a strictly
formatted spreadsheet that is now available on the insolvency practitioner’s
area of The Insolvency Service’s internet site and includes instructions
on how it is to be completed. Practitioners will be able to access the
spreadsheet under the heading “Insolvency Profession & Legislation“
using further links to “Information for and about Insolvency
Practitioners” and “Non-statutory forms”.
Please complete the spreadsheet for one or any number of
registrations and send to: IVA.Remittance@insolvency.gsi.gov.uk
Any
enquiries regarding this article should be directed towards Joe Clogan
telephone 0121 698 4105; email joe.clogan@insolvency.gsi.gov.uk
General enquiries may be addressed to e-mail IVA.Remittance@insolvency.gsi.gov.uk; telephone 0121 698 4102 34.
IVA Forum – straightforward consumer IVA protocol Individual Voluntary Arrangements (IVAs) were
introduced in 1986 as an alternative to bankruptcy. They were originally aimed at individuals with complex
affairs, for example professional persons or traders.
Since their introduction, the credit market has expanded
significantly and currently they are mainly used by people with much
simpler financial affairs. In
the consultation document “Improving IVAs” (see Article 28 of this
Chapter for further information), a stakeholder working group suggested
that the IVA regime could be improved by a number of best practice
methods. That suggestion has
resulted in the straightforward consumer IVA protocol.
The aim has been to achieve this using a standard framework,
providing a balance between the needs of the debtor for some form of debt
resolution and the rights of the creditors.
A
forum was held on the 29 January 2008 at the ICAEW’s Great Hall, and was
attended by 180 delegates. The purpose of the forum was to present a final
version of the protocol (and supporting documents) to stakeholders.
There was overwhelming support for the protocol and it was agreed
that it should be adopted with effect from
1 February 2008. The protocol is essentially a
voluntary code of conduct for those organisations and bodies involved in
managing and agreeing IVAs. It should provide greater
transparency for creditors and debtors alike by using standard clauses and
a consistent format. The
presentation to delegates at the forum, a full copy of the protocol and
associated documents and how the protocol will be reviewed can be found on
the Insolvency Service website: Any enquiries regarding the above
should be directed to Stephen Parcej, Policy Unit, Area 5.7, 21 Bloomsbury
Street, London, WC1B 3QW; telephone: 020 7637 6761, email: Stephen.Parcej@insolvency.gsi.gov.uk General enquiries may be directed
to Policy.Unit@insolvency.gsi.gov.uk
Telephone: 0207 291 6740 35.
Interim Order prior to
proposal of voluntary arrangement – error in Statutory Form 5.2 It has been
drawn to our attention that the wording of the second substantive
paragraph of Form 5.2 (Interim Order of court under section 252 of the
Insolvency Act 1986) does not properly reflect the wording of section
255(6) of the Insolvency Act 1986. Section 255(6) states that an
interim order ceases to have effect at the end of the period of 14
days, beginning with the day after the making of the order. The form states that the order has
effect for XXX days beginning with the day after the date of the
Interim Order. The wording of Form 5.2 is wrong.
The Interim Order takes effect from the date it is made and not the
day after, as the form suggests. We will be seeking to correct the wording
of the form when Part 5 of the Insolvency Rules is next amended, which
will be October 2008 if possible and
if not then April 2009. Any enquiries regarding this
article should be directed towards General enquiries may be directed
to Policy.unit@insolvency.gsi.gov.uk; Telephone: 0207
291 6740 36.
Company Voluntary Arrangement (CVA) moratorium: changes to Companies
Act 2006 “small” companies definition Section 382 of the Companies Act
2006, which sets out the conditions that a company must satisfy to qualify
as “small”, have been amended with effect from 6 April 2008. Schedule
A1 to the Insolvency Act 1986 has also been amended, with effect from the
same day, to remove references to section 247 of the Companies Act 1985
and insert references to section 382 of the Companies Act 2006. A company now qualifies as small
in a year in which it satisfies two or more of the following requirements: 1. Turnover
Not more than £6.5 million Following the amendment to
schedule A1 to the Insolvency Act 1986, the criteria allowing a company to
enter into a moratorium under section 1A of the Act now reflect the new
requirements for qualification as a small company set out above. Any enquiries regarding this
article should be directed towards Andrew Shore, IP Policy Section, Area
5.7, 21 Bloomsbury Street, London, WC1B 3QW; telephone: 020 7291
6769; email: andrew.shore@insolvency.gsi.gov.uk General enquiries may be directed
to IPPolicy.Section@insolvency.gsi.gov.uk;
Telephone: 020 7291 6772
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