Personal Options - Individual Voluntary Arrangement (IVA)
An IVA is a popular way for a sole trader / partnership business in financial difficulty to enter into a formal arrangement with its creditors and get the business back on track (and also avoid bankruptcy). The agreement will typically involve a write-off of some of the debt and/or a time to pay arrangement.
There is no 'one size fits all', so each case is determined by its own particular circumstances. The debtor's proposal requires the agreement of 75% by value of the creditors voting, so larger creditors will have huge influence over the proposal.
The advantage of an IVA is that is it a formal legal solutions and is approved by the court and, when approved, all creditors, even those who voted against it, have to abide by it. Another advantage is that is it not advertised, although a Register of IVAs is maintained at the Insolvency Service in Belfast and is available online.
IVAs in Northern Ireland normally average 1200-1300 per year (there were 1537 in 2017) but a vast number of these are consumer or personal, non-trading IVA cases.
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Our experience with IVAs, just as with CVAs, is that the dividend promised to creditors is often unrealistic and in too many cases aggrieved creditors have to be subsequently advised of a much-reduced figure payable to them. The crucial significance of this is that a failed IVA can often result in the IVA Supervisor (the appointed IP) having to make the debtor bankrupt. As with CVAs, we believe that 5-year IVAs are too long and look forward to reccomendations that they will be capped at 3 years going forward. |
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