An alternative to bankruptcy, an Individual Voluntary Arrangement (IVA) is a legally binding agreement between an individual and his/her creditors. Under this procedure, a licensed insolvency practitioner is appointed as nominee to prepare a report on proposals to be put forward to creditors. Under certain circumstances, such as threat of legal action an interim order can be sought from the court upon its consideration of the proposal which will provide protection from creditors taking further action.
Following the above procedures the nominee gives creditors:
- His or her comments on the debtor’s proposal, including a comparison of what would happen if the debtor was made bankrupt
- The proposal detailing who will be paid what and over what period of time
- Notice of the date and location, at least a fortnight ahead, of the creditor’s meeting
- A list of the assets and liabilities of the debtor, known as a statement of affairs
- A list of creditors
- A guide to the fees charged by the supervisor following approval of the IVA
- A proxy form if a creditor cannot attend the meeting
For the proposal to be accepted, 75% in value, of creditors must vote for it. Any creditors who disagree are still bound by the decision. Creditors can ask for changes to the proposal at the meeting.