Individual Voluntary Arrangements

If a debtor is in financial difficulties, they may attempt to make an Individual Voluntary Arrangement in order to avoid a bankruptcy order. To do this, the debtor must seek advice from an insolvency practitioner, to assist them in drawing up proposals for the approval of creditors. Once the debtor has found an insolvency practitioner to assist them, he should prepare a statement of affairs for the insolvency practitioner and apply to the court for an interim order to stop anyone petitioning for their bankruptcy whilst the creditors consider the proposals.

The insolvency practitioner will prepare a report for the court advising whether there are any realistic proposals, and therefore whether it is worth calling a meeting of creditors. If a meeting is called and 75% (in value of the debt) of the creditors present at the meeting approve the proposal, then all unsecured creditors who had notice of the meeting are bound by the Individual Voluntary Arrangement.

If the debtor fails to comply with the terms of the Individual Voluntary Arrangement, or it transpires that creditors were persuaded to accept the proposal by means of false or misleading information, then the insolvency practitioner or the creditors can petition for the debtor’s bankruptcy. Insolvency is a complicated area of law, and often there are ways around bankruptcy which are better for all parties involved. An insolvency solicitor can offer advice and solutions that the individuals involved may not have been aware of.

If you would like to obtain legal advice on Individual Voluntary Arrangements, Contact Law can put you in touch with a local specialist personal insolvency solicitor free of charge. So, if you have any questions or would like our help in finding local personal insolvency solicitors please call us on 0800 1777 162 or complete the web-form above.