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Insolvency > Chapter 29 & 30 - Individual Voluntary Arrangements > Flashcards

Chapter 29 & 30 - Individual Voluntary Arrangements Flashcards

1
Q

In an IVA do the assets vest with the supervisor?

A

No

The debtor retains control over his assets (unlike bankruptcy where assets automatically vest with trustee)

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2
Q

Can a Supervisions challenge antecedent transactions?

A

No

Supervisor cannot pursue transactions at undervalue or preferences

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3
Q

Can a debtors assets be excluded from an IVA?

A

Yes - however creditors will seek to be compensated

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4
Q

What % of creditors need to support an IVA?

A

At least 75% in value.

If passed, all creditors will be bound by IVA

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5
Q

What is the usually length of an IVA?

A

IVA’s usually have a five year duration

60 or 72 months

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6
Q

An IP’s role will change during the process of obtaining approval for an IVA - what are the three roles?

A

Advisor - create proposal for debtor

Nominee - perform independent, objective review and assessment of proposal. Duty of nominee is owed to the creditors and the court

Supervisor - responsibilities will be governed by terms of the arrangement

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7
Q

Debtor must be in a position to propose an IVA, what are the three criteria?

A
  • Must be an undischarged bankrupt or be able to petition for own bankruptcy
  • Practitioner must be willing to act as nominee
  • Debtor must intend to propose VA
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8
Q

IVA - if debtor intends to request an interim order, it is necessary to ensure the debtor has not applied for an interim order in the last how many months?

A

12 months

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9
Q

According to IVA protocol, what are the characteristics of a debtor likely to be?

A
  • be in receipt of regular sustainable income
  • have several lines of credit or types of income
  • have uncomplicated assets
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10
Q

What are some indicators that a persons circumstances are not suitable for IVA protocol?

A
  • disputed debtors
  • investment properties
  • sole trader with trade debts
  • possibility of lump settlement through gift
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11
Q

IVA - debtors equity in home will be considered de minimis if it is below what value?

A

£5,000

Calculation should be based on 85% of the value of property less any secured borrowing. Meaning consumer will retain at least 15% financial interest in the value of the property in all cases.

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12
Q

IVA protocol - if any re-mortgage or secured borrowing repayments results in the IVA contribution falling under what level, will the IVA be concluded?

A

£50

Supervisor should review in general if under £75

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13
Q

In an IVA can the rights of preferential creditors be modified or excluded without their conesent?

A

No

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14
Q

An IVA proposal must deal with the position regarding VAT during the period between date of interim order and date of approval of IVA (hiatus period) - If if does not deal with it, are HMRC entitle to take normal enforcement measures to collect it?

A

Yes

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15
Q

In an IVA proposal, the debtor can create a trust for the assets. What happens if the debtor then goes bankrupt?

A

The assets held in trust for the purposes of the IVA will not vest in the trustee in bankruptcy but will remain available to the supervisor for payments of costs and distributions to the IVA creditors.

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16
Q

In the absence of express provisions in the IVA allowing for variations of the proposal, what percentage of creditors have to agree to the variation for it to be valid?

A

100%

Usually the proposal of the IVA will allow variation provided that at least 75% in value of creditors are in favour.

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17
Q

Is a consumer IVA suitable if debtor is able to pay off all of the total debt in the first year of the arrangement?

A

No

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18
Q

IVA - what is the effect of an interim order?

A
  • no bankruptcy petition can be presented or proceeded with
  • No landlord may exercise right of forfeiture
  • No other proceedings and no other executions may be commenced or continued except from permission of the court
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19
Q

Interim order for an IVA - what can a secured creditor do/not do in terms of their security?

A
  • will need court permission to enforce their security
  • can appoint a receiver under terms of the charge without seeking court permission
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20
Q

IVA - who can apply for an interim order?

A
  • an undischarged bankrupt, his trustee or OR
  • the debtor
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21
Q

What are the four conditions needed to be satisfied for grant an interim order in an IVA?

A
  • Willing nominee who is authorised to act
  • Debtor has not applied for an interim order in the last 12 months
  • Debtor is an undischarged bankrupt, or could petition for his own bankruptcy
  • Debtor intends to propose IVA
22
Q

Unless extended, how long does an interim order last for in an IVA?

A

Unless an application for extension is made, an interim order will cease to have effect at the end of 14 days from the date it is made.

Provided that the nominees report recommends that creditors consider the proposal, court will extent the interim order to enable proposal to be considered.

Interim order will automatically be discharged 28 days from the date that the creditors decision was reported to court.

23
Q

IVA interim order - what percentage of creditors must oppose for court not to continue the interim order?

A

25% of creditors

24
Q

IVA - when must statement of affairs be made up to for notice to the nominee?

A

Not earlier than 2 weeks before the date of the notice to the nominee

25
Q

IVA - if debtor applies for interim order, how much notice must be given to nominee and any creditors petition for bankruptcy?

A

at least 2 business days notice of the hearing must be given to nominee and any creditors petitioning for bankruptcy

26
Q

IVA - if debtor gets interim order, when must nominee file their report?

A

at least 2 business days before the expiry of the interim order

27
Q

Is a creditor bound by an IVA even if they did not receive notice of it?

A

Yes

28
Q

IVA - no interim order, when does nominee have to submit report by?

A

If nominee is satisfied that the debtor is able to apply for an IVA, they have 14 days from receipt of the proposal to submit a report to the debtors creditors

29
Q

Can a nominee used deemed consent procedure to obtain approval of an IVA?

A

No

30
Q

When does the decision date need to be in an IVA?

A

Not less than 14 days from date of delivery of the notice and not more than 28 days from:
- if interim order = date nominees report was considered in court
- if no interim order = date nominee received the document and SoA

31
Q

IVA - when does the chairs report of the decision procedure need to be filed at court?

A

If interim order was obtained, report must be filed in court within 4 business days

If no interim order, the report does not need to be filed at court

32
Q

IVA - within what timeframe must notices go out?

A

If interim order - ASARP after filing of report in court

If no interim order - within 4 business days of the decision date

33
Q

IVA - within what time period can an appeal be made?

A

If interim order - 28 days after the 4 business days to file report

In no interim order - 28 days from decision date

34
Q

Within what time period must Secretary of State be notified of IVA?

A

ASARP and within 14 days or report being filed at court/sent to creditors

35
Q

If a debtor or creditor requests a nominee or supervisor to provide statement setting how how much time staff have spent on the appointment, when must it be provided?

A

Within 28 days and free of charge.

But not after two years following the date the office holder ceased to act.

36
Q

The IVA protocol will permit variation of up to what percentage reduction in dividends without holding a further meeting?

A

15% reduction

37
Q

Three grounds for the supervisor to present a bankruptcy petition

A
  • Failure to comply with obligations under the voluntary arrangement
  • Giving false or misleading material information or making a material omission in any document at the creditors meeting
  • Failure to comply with the supervisors reasonable requests
38
Q

Within what time period must the supervisor send out the final report after completion of IVA?

A

within 28 days

To be sent to creditors and secretary of state

39
Q

In an IVA, within what timeframe do completion certificate need to be issued?

A

ASARP and no later than 6 months from final contribution

40
Q

IVA - will possession of goods subject to HP agreement prevented by an interim order?

A

No

41
Q

IVA - will enforcement of a judgement debt be prevented by an interim order?

A

Yes

42
Q

IVA - will CRAR be prevented by an interim order?

A

Yes

43
Q

Where no application for extension is made, after what period will an interim order cease to have effect?

A

14 days

44
Q

What is the effect of default in the voluntary arrangement on the voluntary arrangement assets?

A

The assets are held on trust for the benefit of the creditors bound to the voluntary arrangement and should be distributed by the supervisor

45
Q

IVA - will forfeiture of a lease be prevented by an interim order?

A

Yes

46
Q

IVA - will forfeiture of a lease be prevented by an interim order?

A

Yes

47
Q

Will a secured creditor be bound by IVA

A

Not without consent of secured creditor.
Secured creditor can still enforce their security.

48
Q

Are preferential creditors bound by IVA?

A

Preferential creditors and their priority position cannot be altered in IVA without their consent.

49
Q

If one of the partners in a partnership is made bankrupt, will this result in the automatic dissolution of the partnership?

A

Yes

50
Q

If one of the partners in a partnership enters into an IVA, will this result in the automatic dissolution of the partnership?

A

No

51
Q

If a partnership is insolvent and seeks a partnership voluntary arrangement, will it have the benefit of an interim order?

A

No

Insolvency (23 decks)

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