Voluntary Arrangements Flashcards by Sam Knight

Where an individual wishes to put a proposal to his creditors for an Individual Voluntary Arrangement, he will be required to approach an Insolvency Practitioner to act in relation to his affairs. Under what title is the Insolvency Practitioner known prior to the meeting of creditors? Is it:

(a) The Supervisor
(b) The Nominee
(c) The Administrator
(d) The Interim Receiver
(e) The Official Receiver

(b) The Nominee

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For what period can an Individual Voluntary Arrangement continue? Is it:

(a) 2 Years
(b) 3 Years
(c) 5 Years
(d) 4 Years
(e) Any period agreed between the debtor and his creditors

(e) but the proposal should state a definite period

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Where a debtor makes an application to the court to allow him protection from his creditors in order to put a proposal to those creditors under a Voluntary Arrangement a specific court order will normally be granted. By what name is this order described:

(a) A Supervision Order
(b) An Interim Order
(c) An Administration Order
(d) A Bankruptcy Order
(e) An Injunction

(b) An Interim Order

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You are administering an Individual Voluntary arrangement that has been approved by creditors at a duly convened meeting and the chairman of the meeting has issued a report and filed it in court. Within what period from this date may any creditor who is aggrieved or who may have been prejudiced by the terms of the arrangement apply to court to challenge the meeting’s decision under s262 IA 1986? Is it:

(a) 14 Days
(b) 21 Days
(c) 28 Days
(d) 32 Days
(e) 36 Days

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At a meeting of creditors convened for the purposes of approving an Individual Voluntary Arrangement with or without modifications, what is the required majority in value of creditors, who vote either in person or by proxy, for it to be successful? Is it:

(a) 50%
(b) 75%
(c) 90%
(d) None of these

(b) 75%

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In an Individual Voluntary Arrangement does the DBEIS charge:

(a) A levy based on the value of assets realised
(b) An initial registration fee
(c) An annual levy based on a fixed scale
(d) None of these

(b)

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Under what circumstances may the rights of the preferential and secured creditors be varied in a Voluntary Arrangement proposal?

Preferential and secured creditors’ rights could only be varied if they agreed

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Where a secured creditor values his security and the amount is insufficient to cover the principal debt outstanding plus interest, how will the chair of the creditors’ meeting allow this particular creditor to vote

The creditor would be a ‘part secured’ creditor. A part secured creditor can only vote for the unsecured elements of his or her claim. The creditor can then only vote in respect of the debt which is not secured and the chairman should accept the claim for voting purposes accordingly

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If the chair is not satisfied with the amount at which the secured creditor has valued his security, what should the chair do in these circumstances?

Creditor not be able to vote for the secured element of his claim.
For the unsecured element, the chair should accept the claim but mark it as ‘objected to’

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Normally under what conditions would an Individual Voluntary Arrangement be brought to an end by default by the debtor?

An IVA would ended by default by the debtor in the following circumstances:

debtor failed to comply with obligations under the VA
debtor gave false/misleading information or made a material omission.
debtor failed to comply with the Supervisor’s reasonable requests.
A well drafted proposal should set out clearly the circumstances in which the debtor will be deemed to be in default.

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Who may petition for the Bankruptcy where the debtor has defaulted in respect of the terms of his Individual Voluntary Arrangement?

The Supervisor, or a creditor bound by the IVA, may petition for Bankruptcy where the debtor has defaulted in respect of the terms of his or her IVA. The debtor cannot petition on this ground.

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If the Supervisor wished to act as Trustee in Bankruptcy in these circumstances, what are the detailed provisions that he would have to comply with under the Insolvency Rules 2016, as amended.

Supervisor would have to ensure that there was no conflict of interest present
Where a Bankruptcy Order is made (whether or not on a petition by the Supervisor) at a time when there is a Supervisor of an IVA the court may appoint the Supervisor of the arrangement as Trustee
Where a court appoints a Trustee, the person appointed must file a statement confirming that he is an Insolvency Practitioner

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What conditions are required under s276(1) IA 1986 to satisfy the court that a Bankruptcy Order ought to be made under a petition following default in connection with a Voluntary Arrangement?

court shall not make a Bankruptcy Order where the debtor is the subject of a Voluntary Arrangement unless it is satisfied:
That Bankruptcy will produce a better result for the body of creditors
That, after a minimum of half the time of the IVA, the Arrangement isn’t working
That the only way to pursue a criminal sanctions against the debtor is via statute
The debtor has failed to comply with obligations under the IVA
That 75% or more of the creditors in value have petitioned for Bankruptcy

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What is the position with regard to expenses properly incurred as expenses of the Administration of the Voluntary Arrangement where a Bankruptcy Order is made on a petition under s264(1)(c) IA 1986?

Supervisor’s costs shall be a first charge on the Bankrupts estate where a Bankruptcy Order is made on a petition under s264(1)(c).

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What is the minimum period of notice required to be given to the creditors and members of a company to consider a proposal for a Company Voluntary Arrangement? Is it:

(a) 7 days
(b) Three weeks
(c) 1 month
(d) 28 days
(e) 14 days

(e) 14 days

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During the period of a Company Voluntary Arrangement, what is the minimum frequency if any, with which the Supervisor must submit to the requisite parties an abstract of his receipts and payments as Supervisor? Is it:

(a) Every 28 months
(b) Every 6 months
(c) Every 12 months
(d) Every 2 years
(e) Each time a dividend is paid to creditors

(c)

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Following the completion of a Company Voluntary Arrangement within what period must the Supervisor send to all creditors and members notice that the Voluntary Arrangement has been fully implemented, together with his report summarising his receipts and payments? Is it:

(a) 14 days
(b) 3 months
(c) 4 weeks
(d) 2 months
(e) 7 days

(e) 7 days

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Which of the following must be included within the debtor’s proposal for a Voluntary Arrangement? Is it:
(a) The proposed duration of the Voluntary Arrangement
(b) Clause stipulating that the Supervisor must instigate Bankruptcy proceedings in the event of
default
(c) Proposed dates and amounts of distributions to creditors
(d) Details of the debtor’s income
(e) Clause stipulating that the debtor’s tax affairs will be brought up to date
(f) Details of assets to be excluded
(g) The extent of guarantees given to support the arrangement

All BUT (b) and (e)

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Which of the following is not a requirement of the Rules regarding the contents of a proposal in an Individual Voluntary Arrangement?
(a) The proposed duration of the Voluntary Arrangement
(b) The manner in which it is proposed that the Supervisor of the Arrangement should be
remunerated, and his expenses defrayed
(c) The proposed dates of distribution to creditors, with estimates of their amounts
(d) Provision for Capital Gains Tax arising on the disposal of assets
(e) The functions which are to be undertaken by the Supervisor of the Arrangement

(d) Provision for Capital Gains Tax arising on the disposal of assets

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Immediately following a meeting of creditors where an Individual Voluntary Arrangement is approved the Chairman shall report to the court. Which of the following is not a requirement as to
the contents of that report.
(a) The resolutions taken at the meeting and the decision on each one
(b) A statement as to whether the proposal for a Voluntary Arrangement was approved or rejected and, if approved, with what (if any) modifications
(c) A list of the creditors (with their respective values) who are who are present or represented at the meeting, and how they vote on each resolution
(d) Such further information (if any) that the chair thinks it appropriate to make known to the court
(e) A statement that the debtor has agreed to any modifications that were put forward by the creditors at the meeting

(e) A statement that the debtor has agreed to any modifications that were put forward by the creditors at the meeting

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In which one of the following insolvency procedures is the value of the specific penalty bond not to be based on the value of the assets disclosed in the Statement of Affairs?

(a) Administrative Receivership
(b) Provisional Liquidation
(c) Creditors’ Voluntary Liquidation
(d) Company Voluntary Arrangement

(a) Administrative Receivership

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Following what type of appointment is it necessary to receive the court’s directions to advertise a Trustee’s appointment? Is it:

(a) Bankruptcy following a Voluntary Arrangement
(b) Appointment by meeting following a creditor’s petition
(c) Appointment by meeting following a debtor’s petition
(d) Appointment by the Secretary of State

(d) Appointment by the Secretary of State

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28 In submitting his report to the Secretary of State following approval of the Voluntary Arrangement at a creditors’ meeting, what should the report include? Is it:

(a) Extent of preferential creditor claims
(b) The name and address of the debtor
(c) The date on which the arrangement was approved by the creditors
(d) Copy of the proposal document
(e) Copy of Nominee’s report
(f) The name and address of the Supervisor
(g) The court in which the chairman’s report has been filed
(h) Sealed copy of the interim order

(b), (c), (f)

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How many Voluntary Arrangements with an Interim Order can a debtor propose?
(a) As many as s/he likes
(b) One at a time
(c) One per year
(d) One every three years
(e) One IVA per set of creditors: once rejected, no further proposal should ever be made to the
same creditor

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In which of the following corporate insolvency procedures are there no provisions in the legislation covering the operation of Committees? (a) Administrations (b) Administrative Receiverships (c) Creditors’ Voluntary Liquidations (d) Compulsory Liquidations (e) Company Voluntary Arrangements

(e) Company Voluntary Arrangements

The Nominee’s Report must reach court in respect of an Individual Voluntary Arrangement (a) With the application for the Interim Order (b) On the day the Interim Order ceases (c) 2 days before the Interim Order ceases (d) 7 days before the Interim Order ceases (e) 14 days before the creditors’ meeting

If a debtor has acted to the detriment of his creditors in disposing of his assets for less than their value, yet still wishes to propose an Individual Voluntary Arrangement, what is the correct course of action for him? (a) Not reveal the dealings unless creditors enquire (b) Make himself Bankrupt in order to allow a Trustee to challenge the transaction (c) Disclose these dealings to his creditors, openly addressing the matter (d) Sue the third party for recovery of the assets, in order to include them in the arrangement

In a Company Voluntary Arrangement which creditors are bound by the terms of the approved arrangement? (a) All creditors included and scheduled within the proposal (b) Creditors that attended the creditors’ meeting (c) Creditors that received notice of the meeting and were entitled to vote (d) Creditors that were entitled to vote at the meeting or would have been so entitled if they had had notice of it

(d) Creditors that were entitled to vote at the meeting or would have been so entitled if they had had notice of it

What percentage of creditors are required to approve an Individual Voluntary Arrangement with or without modifications? (a) 50% (b) 75% (c) 90% (d) All of them

(b) 75%

The creditors meeting to consider Mr Jones’ proposal for an Individual Voluntary Arrangement is to be held on 29 May 2002. If the requisite majority for approval of the arrangement is not obtained on that date, what is the latest date on which an adjourned meeting could be held? (a) 7 June 2002 (b) 10 June 2002 (c) 12 June 2002 (d) 21 June 2002 (e) 28 June 2002

What Rule deals with the contents of a Company Voluntary Arrangement Proposal? (a) Rule 2.1 (b) Rule 2.2 (c) Rule 2.3 (d) Rule 2.4 (e) Rule 2.5

Who/which of the following maintains a register of Individual Voluntary Arrangements? (a) The district court in which the relevant debtor resides (b) The Secretary of State (c) The Official Receiver (d) The High Court (e) None of the above

(b) The Secretary of State

If the Voluntary Arrangement fails and the company goes into Liquidation, what is the effect on any trust created by the Company Voluntary Arrangement?

- Have to look firstly at the terms of the CVA to see what should happen in the event of the CVA failing - If the proposal is silent, then by NT Gallagher and Sons a trust is created by default - If the trust survives, then the CVA assets will remain for the benefit of the CVA creditors only. - CVA creditors can prove in the Liquidation for the balance of their claims.

Where a debtor is an undischarged Bankrupt and subsequently has applied for an Interim Order because he intends to propose a Voluntary Arrangement, for the purposes of assessing a pre- Bankruptcy Order creditor’s entitlement to vote, which of the following statements is correct? The claim is calculated by reference to: (a) The amount of the debt owed at the date of the Interim Order (b) The amount of the debt owed at the date of the creditors’ meeting (c) The amount of the debt owed at the date of the Bankruptcy Order (d) The amount of the debt owed at the date of the proposal (e) The amount of the debt owed at the date of the Bankruptcy petition

In a Company Voluntary Arrangement the Nominee submits a report to court stating whether, in his opinion, the Arrangement has a reasonable prospect of being approved and implemented. Within what time period must this report be submitted? (a) Within 21 days of giving the notice of the proposal (b) Within 28 days of giving the notice of the proposal (c) Within 21 days of forming the opinion that the Arrangement has a reasonable prospect of being implemented (d) Within 28 days of forming the opinion that the Arrangement has a reasonable prospect of being implemented

(b) Within 28 days of giving the notice of the proposal

The effect of an approved proposal for a Voluntary Arrangement is to bind various parties. Which of the following will not be bound: (a) Those who were entitled to vote at the creditors’ meeting (b) Those who would have been entitled to vote if they had received notice of the meeting (c) A creditor whose debt is fully secured (d) The debtor (e) A creditor with a claim for unliquidated damages

A Nominee may call upon a debtor to provide more information to assist him with the preparation of his report to court. Which one of the following is not included in this Rule? (a) Further and better particulars of why the debtor has become insolvent (b) Whether the debtor has been concerned in the affairs of any company that has become insolvent, where so ever in the world incorporated (c) Whether the debtor has previously been adjudged Bankrupt or entered into an arrangement with his creditors (d) Particulars of any business with which the debtor’s spouse has been concerned (e) Particulars of any previous proposals for a Voluntary Arrangement which the debtor has made

(d) Particulars of any business with which the debtor’s spouse has been concerned

When a moratorium comes into force prior to the calling of meetings to approve a Company Voluntary Arrangement the Nominee is required to advertise the fact that a moratorium is in force. When must the Nominee place this advertisement? (a) Forthwith (b) As soon as is reasonably practical (c) Within four business days of the moratorium coming into force (d) Within four days of the moratorium coming into force (e) Within seven days of the moratorium coming into force

(b) As soon as is reasonably practical

To which of the following corporate insolvency procedures does the prescribed part not necessarily apply? (a) Company Voluntary Arrangement (b) Provisional Liquidation (c) Administration (d) Receivership (e) Liquidation

(d) Receivership

What obligations does the Nominee or Supervisor of an Individual Voluntary Arrangement have if he discovers that the debtor has been guilty of any offence in connection with the arrangement for which he is criminally liable?

the Nominee/Supervisor should forthwith: - Report the matter to the Secretary of State, and - Provide the Secretary of State with such information and give the Secretary of State such access to and facilities for inspecting and taking copies of documents as the Secretary of State requires.

Within what period of being given notice of a proposal for a Company Voluntary Arrangement (subject to extension by the court) must a Nominee report to the court whether meetings of the company and its creditors should be called to consider the proposal? (a) 31 days (b) 14 days (c) One month (d) 21 days (e) 28 days

(e) 28 days

Who is the appropriate authority to whom company officers suspected of an offence in connection with a Company Voluntary Arrangement should be reported? (a) The Official Receiver (b) The Registrar of Companies (c) The Secretary of State (d) A subsequently appointed Liquidator (e) The police

Which of the following persons may not apply to court to challenge a decision made at a meeting of creditors to approve a Voluntary Arrangement? (a) The debtor (b) The Official Receiver, if the debtor is an undischarged Bankrupt (c) A creditor whose claim is fully secured (d) The Nominee

Where a Voluntary Arrangement has been approved but it appears to the Supervisor that the debtor may have committed a criminal offence in connection with the arrangement, the Supervisor has certain duties. Which of the following is not a statutory obligation of the Supervisor? (a) Report the matter to the Secretary of State (b) Forthwith apply to the court for the revocation of the arrangement (c) Provide the Secretary of State with information (d) Give access to the Secretary of State to documents in the Supervisor’s possession

(b) Forthwith apply to the court for the revocation of the arrangement

Where an officeholder is appointed in one capacity to an estate and is subsequently appointed in another capacity to the same estate, in which of the following circumstances will a second specific penalty bond not be required? (a) When a Supervisor of a Company Voluntary Arrangement is appointed Liquidator (b) When a Nominee of a Company Voluntary Arrangement is appointed Supervisor (c) When a Members’ Voluntary Liquidator becomes a Creditors’ Voluntary Liquidator (d) When an Administrator becomes Supervisor of a Company Voluntary Arrangement (e) Where a Supervisor in an Individual Voluntary Arrangement becomes Trustee in Bankruptcy

(b) When a Nominee of a Company Voluntary Arrangement is appointed Supervisor

Which one of the following statements in relation to a debtor who has deliberately omitted assets or creditors in order to gain approval of his proposals for a Voluntary Arrangement is true? (a) The debtor will have committed a civil offence preventing him from entering into this or any other arrangement for 12 months (b) The debtor will have committed a civil offence terminating any approved Voluntary Arrangement (c) The debtor will have committed a criminal offence (with a maximum penalty of seven years imprisonment and fine) only where the proposals have been approved (d) The debtor will have committed a criminal offence (with a maximum penalty of seven years imprisonment and fine) whether or not his proposals are approved by creditors.

(d) The debtor will have committed a criminal offence (with a maximum penalty of seven years imprisonment and fine) whether or not his proposals are approved by creditors.

10 Which one of the following statements is false in relation to a so called ‘Fast Track Voluntary Arrangement’ under Insolvency Act s263A? (a) An Interim Order must be applied for (b) An Interim Order is not needed (c) Only the Official Receiver can act as Nominee (d) Only undischarged Bankrupts can use this procedure

(a) An Interim Order must be applied for

20 How much is the Individual Voluntary Arrangement Registration Fee? (a) £5 (b) £10 (c) £15 (d) £20

Which one of the following statements is false? (a) The Individual Insolvency Register is maintained by the Secretary of State (b) The Individual Insolvency Register contains information on Bankruptcies and on Individual Voluntary Arrangements (c) Bankruptcy Restrictions Orders are recorded in the Bankruptcy Restrictions Register (d) Bankruptcy Restrictions Orders are recorded in the Individual Insolvency Register

(d) Bankruptcy Restrictions Orders are recorded in the Individual Insolvency Register

Where no steps are taken to obtain a moratorium, to whom does the Nominee submit his report on the prospect of a Company Voluntary Arrangement being approved and implemented? (a) The creditors (b) The court (c) The Official Receiver (d) The directors

(b) The court

Which one of the following can disclaim onerous property? (a) A Liquidator (b) An Administrator (c) A Supervisor of a Company Voluntary Arrangement (d) All of the above

(a) A Liquidator

In a Company Voluntary Arrangement name the persons who may apply to court to challenge the decision of the outcome of the meeting of creditors.

- A person entitled to vote at either the meeting of creditors or the company - A person who would have been entitled to vote at the creditors’ meeting if he had notice of it - The Nominee or any person who has replaced her/him under s2(4) or s4(2) - If the company is being wound up or is in Administration, the Liquidator or Administrator

16 Don Brown consulted your firm when a Bankruptcy petition was served on him. As an accountant he can’t risk Bankruptcy. He has appointed a partner in your firm as his Nominee. An Interim Order has been obtained and a meeting of creditors called to approve proposals for an Individual Voluntary Arrangement under s257. You have been asked to prepare the voting schedule for the meeting. Indicate the value at which you would admit the following claims for voting purposes and give your reasons. (a) Claim of Zehan Butar for 60,000 yen for goods supplied. Exchange rate as at date of presentation of Bankruptcy petition 100 yen/£ Exchange rate as at date of Interim Order 200 yen/£ Exchange rate as at date of s257 creditors’ meeting 300 yen/£

- An IVA proposal will incorporate the Bankruptcy Rules re proofs of debt - Claims in foreign currency must be converted into Sterling at the official rate as at the date of the Bankruptcy Order. - Claims in the Voluntary Arrangement are calculated as at the date of the creditors’ meeting. - The exchange rate at the date of the meeting is 300 yen/£. - Claim is for 60,000 yen @ 300 yen/£ = £200.

Big Bank plc hold a mortgage over Mr Brown’s house. The house is on the market for sale (voluntarily) at £200,000, a realistic price to achieve as quick a sale as possible. Big Bank are owed (as at today’s date) £192,000. On the face of it they are fully secured but they feel that in this market they will almost certainly have a shortfall, although the amount cannot be ascertained until such time as a sale is concluded. They want to vote at the meeting and have tabled some modifications.

- Secured creditors can only vote in respect of any unsecured balance of their claim. - However, where the claim is unascertained (as here, the actual claim will not be known until the property is sold) the chair of the meeting can agree an estimated minimum value for the debt and allow the creditor to vote. - The creditor will then be bound by the terms of the Arrangement. - The claim should be admitted to vote for £1

Where an Interim Order is obtained in respect of IVA proceedings, what specific matters should be included in the Nominee’s report to court under s256(1)?

- Whether in his opinion the Voluntary Arrangement proposed has a reasonable chance of being approved and implemented - Whether in his opinion a meeting of the debtor’s creditors should be summoned to consider the proposal - If in his opinion such a meeting should be summoned the date and time and place at which he proposes the meeting should be held

Which one of the following may not propose a Company Voluntary Arrangement: (a) Directors (b) Administrative Receiver (c) Administrator (d) Liquidator

(b) Administrative Receiver

13 Your principal is acting as Nominee in relation to a directors’ Company Voluntary Arrangement proposal. Under SIP 3.2 what steps should the Nominee take to satisfy himself that the value of the assets is appropriately reflected in the Statement of Affairs?

- Where the value of an asset is material to the outcome of the arrangement, consideration should be given to obtaining corroborative evidence as to its value. - The Nominee should also ensure that a comprehensive schedule of non-trading assets in which the company has an interest be prepared, together with explanatory notes. - If there is a business – consider (in conjunction with the directors) the manner in which it is to be dealt with. If the business is to be continued a business plan should be produced to justify any decision, stating the assumptions on which it is based, and in appropriate detail having regard to the circumstances and size of the undertaking.

Where the directors of a company wish to obtain a moratorium, they must supply information to the Nominee. The Nominee must then opine by submitting to the directors a statement. Which of these are not included in the Nominee’s statement? (a) Meetings of the company and its creditors should be summoned to consider the proposed Voluntary Arrangement. (b) The proposed Voluntary Arrangement has a reasonable prospect of being approved and implemented (c) The directors have made a full disclosure of the company’s affairs (d) The company is likely to have sufficient funds available to it during the proposed moratorium to enable it to carry on business.

A company officer attends the meeting in person on behalf of his company without lodging a proxy. The company has previously lodged a valid proof of debt. He wishes to vote in favour of the arrangement.

No proxy has been lodged therefore the company officer is not entitled to vote

A proxy in favour of the chair directing the chair to vote for the resolution, supported by a proof of debt disclosing that the creditor holds security (valued by him) in respect of part of the debt.

- Secured creditors may vote but only in respect of any unsecured element of their debt - The chairman should ask the creditor to deduct the value of its security for voting purposes

A creditor, who is a sole trader, attends the meeting in person without lodging a proxy. He has previously lodged a valid proof of debt. He wishes to vote against the arrangement.

- The creditor has lodged a valid proof of debt and is therefore entitled to vote at the meeting - A proxy is not required because the creditor is an individual who is attending the meeting in person

A properly completed faxed proxy in favour of the chairman is received by the deadline for the meeting from a creditor. The original proxy has not been received. The proxy directs the chairman to vote for the arrangement.

- Faxed proxies are acceptable - The creditor should be allowed to vote.

A proxy in favour of the chairman supported by proof of debt for an estimated sum but the value of the claim has yet to be ascertained. The proxy directs the chairman to vote in favour of the arrangement

- Creditors are unable to vote in respect of claims which are unascertained unless the chairman agrees to put an estimated minimum value on the debt and admits the proof for the purposes of voting - The chair should accept the estimated value but should mark it that this is not in agreement of the proof for dividend purposes but for voting purposes only.

A debtor owes £3,890 to their creditors and has surplus income of £75 per month after settling essential expenses. They are a home owner. Given these facts, what personal insolvency option would you recommend? a) Bankruptcy b) Individual Voluntary Arrangement c) Debt Management Plan d) Debt Relief Order

c) Debt Management Plan

8. The Ethics Code advises that an insolvency practitioner should not accept an appointment in which one of the following circumstances? a) Liquidator in a Members’ Voluntary Liquidation where the liquidator has previously acted as auditor b) Liquidator in a Creditors’ Voluntary Liquidation where the Liquidator previously acted as administrator c) Trustee in Bankruptcy where the Trustee has previously acted as supervisor of a failed Voluntary Arrangement d) Liquidator in a Creditors’ Voluntary Liquidation where the Liquidator has previously acted as administrative receiver

d) Liquidator in a Creditors’ Voluntary Liquidation where the Liquidator has previously acted as Administrative receiver

13. Under section 262 of the Act who may challenge the decision of a meeting approving a debtor’s Individual Voluntary Arrangement?

- the debtor - a person entitled to vote at the creditors’ meeting - or who would have been so entitled if they had received notice of it - the Nominee or his replacement - if the debtor is an undischarged bankrupt, the Trustee or the Official Receiver

A Supervisor of an Individual Voluntary Arrangement (“IVA”) intends to call a meeting of creditors to consider a variation to the Arrangement. How many days’ notice of the variation meeting is he required to give creditors? a) At least 7 days b) At least 14 days c) At least 21 days d) At least 28 days

b) At least 14 days

Within what time periods must a supervisor of an Individual Voluntary Arrangement (“IVA”) send a progress report, and to whom

- For each period of 12 months, ending with the anniversary of the commencement of the IVA - a progress report must be sent within 2 months of the end of that period - to the debtor and - to all creditors who are bound by the IVA and whose addresses are known to the Supervisor.

A Supervisor of an Individual Voluntary Arrangement (‘IVA’) has obtained a resolution for her fees to be calculated on a time cost basis and estimates that his fees will be £6,500. According to SIP 3.1, what should the Supervisor do if his costs have increased beyond the previously reported estimate? a) Not draw any further remuneration b) Stop working on the case so further time costs are not incurred c) Report the increase to creditors at the next available opportunity d) Obtain a new resolution from creditors

c) Report the increase to creditors at the next available opportunity

In order for a Company Voluntary Arrangement (‘CVA’) to be approved, what value of creditors is required to vote in favour of the CVA? a) Three quarters (by value) of the votes cast at the creditors’ meeting b) A simple majority (by value) of the votes cast at the creditors’ meeting c) Three quarters (by number) of the unsecured creditors given notice of the meeting d) A simple majority (in number) of the unsecured creditors given notice of the meeting

a) Three quarters (by value) of the votes cast at the creditors’ meeting

Which one of the following statements in relation to a supervisor of an individual voluntary arrangement (“IVA”) is not true? a) A supervisor may apply to Court for directions on any matter b) A supervisor may only apply to Court for directions where an interim order was first obtained c) The Court may appoint a person to replace the existing supervisor d) The Court may appoint a person to act as a supervisor alongside the existing supervisor

b) A supervisor may only apply to Court for directions where an interim order was first obtained

7. Following legislative changes in October 2015, where office holders are seeking approval to draw fees on a time costs basis, fees and costs estimates need to be provided in advance of approval being sought. Which type of formal insolvencies does this not apply to? a) Members voluntary liquidation (“MVL”) and bankruptcy b) MVL and company voluntary arrangement (“CVA”) b) Compulsory liquidation and administration c) Creditors’ voluntary liquidation (“CVL”) and administration

b) MVL and company voluntary arrangement (“CVA”)

8. Which one of the following cannot apply to the Court for an administration order? a) The company b) The members c) The directors d) The supervisor of a Company Voluntary Arrangement (“CVA”)

b) The members

The Insolvency Service has said that, based on case law, an Insolvency Practitioner must exercise professional judgement in respect of a proposed Individual Voluntary Arrangement (“IVA”), ensuring what?

- It is feasible - Fair to debtors and creditors - Fit to be put to creditors - Provides an acceptable alternative to bankruptcy

In a protocol Individual Voluntary Arrangement (“IVA”) the supervisor has the discretion to admit claims without the need for additional verification. What is the value of such claims?

£1,000 or less

The grounds upon which a CVA could be challenged

- That a voluntary arrangement unfairly prejudices the interests of a creditor, member or contributory - That there has been a material irregularity in relation to the meeting of the company or in a qualifying decision procedure

Who may challenge a CVA and within what timescale?

- A person entitled to vote at the meeting of the company or in the qualifying decision procedure - A person who would have been entitled to vote if he had notice of it; - The nominee; - If the company is being wound up or is in administration – the liquidator or the administrator. - After 28 days beginning with the first day on which the report of the members meeting and the report of the decision of creditors was reported to Court; (b) In the case of a person who was not given notice – 28 days from the date on which he became aware that the qualifying decision procedure had taken place.

What four conditions need to be satisfied for the court to make an Interim Order?

- IP willing to act as Nominee - Debtor could petition for own Bankruptcy - Debtor has not applied for an Interim Order in the last 12 months - Debtor intends to propose an IVA

Where an IVA is approved after a Bankruptcy Order has been made at a time when the debtor is an undischarged Bankrupt, what may the court order?

- Annul the bankruptcy order - Give directions on the conduct of the bankruptcy - Give directions on the administration of the bankrupt's estate to facilitate the implementation of the IVA

Name the four parties on whom notice of an Interim Order must be served by the applicant where the debtor is an undischarged Bankrupt

Nominee Bankrupt Official Receiver Trustee

In accordance with SIP 3.1 and the case of Re A Debtor, Greystoke v Hamilton Smith and Others, state two out of the three conditions that should be met when preparing the Nominee’s report to court and when considering whether a meeting of creditors should be convened to consider the debtor’s proposals for an IVA.

1 That the debtor’s true position as to assets and liabilities is not materially different from that which it is represented to the creditors to be 2 That the debtor’s proposal has a real prospect of being implemented in the way it is represented it will be 3 That there is no already manifest yet unavoidable prospective unfairness

Where the debtor provides a Statement of Affairs with his/her proposal for an Individual Voluntary Arrangement, the Statement of Affairs shall be made up to a date not earlier than how long before the date of the notice to the Nominee?

2 weeks

In IVA proceedings who may chair the creditors’ meeting, should one be required, to consider the debtor’s proposals?

- The Nominee will be chair of the meeting. - If Nominee cannot attend, he can nominate someone else in his place. The other person must be: - a qualified IP - an authorised person in relation to the debtor - an employee of the Nominee or his firm who is experienced in insolvency matters.

What is the criteria for a small company moratorium in a CVA?

- Turnover less than 10.2 million - Assets less than 5.1 million on balance sheet - Less than 50 employees in the last financial year - Not be in Administration nor have been in Administration in the last 12 months - Not be in the process of being wound up - No Administrative Receiver appointed - No CVA in place - No Provisional Liquidator appointed

Options - BKY vs IVA and others

- COSTS - CREDIT RATING - ANTECEDENT TRANSACTIONS - CRIMINAL OFFENCES - INCOME - DURATION - PROTECTION - INVESTIGATIONS - STIGMA - SOLE TRADERS - HOME - EMPLOYMENT - ASSETS - DIRECTORS - CREDITOR SUPPORT

First days/weeks as Trustee

- REGISTER interest - VALUATIONS - VAT 769 - INSURANCE - LEASE/LANDLORD - EMPLOYEES - BOND - ADVERTISE - SITE visit - NOTIFY interest - mortgage co - SAFETY/HEALTH

Matrimonial home

- NOTICE - 3 YEARS LESS 14 DAYS - EQUITY - VESTS IN TRUSTEE - SLIME - SALE - EXCEPTIONAL CIRCUMSTANCES - CHARGING ORDER