WHAT IS AN INDIVIDUAL VOLUNTARY ARRANGEMENT?
An Individual Voluntary Arrangement
("IVA") is very similar to a CVA.
A debtor, either as an individual or in conjunction
with other debtors (e.g. a partnership) will
made a proposal to his or her creditors. Typically
this proposal will contain an offer to the
creditors to pay only a percentage of the
debt (a dividend). In some cases the full
debt may be paid but this will typically be
much later than when the debt would ordinarily
be due to be discharged.
In many cases the IVA will contain a proposal
whereby the debt would be discharged to the
creditors over a substantial period of time.
This cannot be more than five years. In these
circumstances, the IVA will make provision
by way of the Proposal whereby the debtor
will make contributions from his income as
well as any contribution at the commencement
of the IVA from any capital which the debtor
may possess.
It is common in IVAs for certain capital assets
to be excluded from the IVA.
One of the important benefits is that the
debtor can (provided that the proposal which
is accepted by the creditors makes provision
for this) continue to live in his or her home
so long as the debtor complies with the terms
of the IVA. If the debtor fails to comply
with the terms of the IVA Proposal, then the
Proposal ordinarily will contain a provision
whereby the IP who has conduct of the Proposal
(who is known as the Supervisor of the IVA)
is contractually obliged to Petition for the
bankruptcy of the debtor. Alternatively, it
is possible to return to the creditors in
order to make other arrangements. |
