BusinessBusiness RecoveryWill the banks back simple IVAs?

Will the banks back simple IVAs?

Simple IVAs are a central part of the Insolvency Services' plans to streamline the sector, but will they work?

The government has outlined plans to overhaul individual voluntary
arrangements, requiring fewer court papers to be filed, as such arrangements
surge in popularity.

The Insolvency Service has come
up with plans to streamline the process. The agency originally released two
different proposals for a ‘simple’ IVA, now whittled down to one and in its
final period of consultation.

The simple IVA, or SIVA, is the central part of the agency’s plan to speed up
processes, saving costs for insolvency practitioners and giving better returns
to creditors.

The agency proposes that the SIVA will be for liabilities of less than
£75,000. Creditors will have to attend fewer face-to-face meetings and will not
be able to suggest modifications to the debtor’s proposal. A majority of
creditors, rather than 75%, will make decisions.

A SIVA will, crucially for practitioners, have simpler reporting requirements
and no filing of routine papers to court. Creditors will have to make claims
within 90 days.

The Insolvency Service estimates that as many as 80% of IVAs in 2005 would
have fallen into the SIVA regime.

The Insolvency Practitioners Association welcomes the gist of the proposals,
but warns that there is still much work to do to make sure the banks are kept
onside.

IPA policy chief Peter Joyce says two issues must be ‘squared off’:
simplifying the insolvency processes in tandem with reducing barriers for
individuals to administer insolvencies through ‘insolvency-lite’.

Joyce warns that making it easier for debtors to enter insolvency will not be
looked upon kindly by banks if they are concerned about the level of
qualifications required for individuals to manage insolvencies.

‘We think IVAs are good, and SIVAs potentially good, but we don’t want to run
into opposition. Whether creditors in the present climate turn their face
against these proposals, there’s the risk debtors will have to use the more
complicated [IVA] procedures or face bankruptcy,’ said Joyce.

Related Articles

Investment firm acquires Avon Steel Company Limited

Business Recovery Investment firm acquires Avon Steel Company Limited

1w Emma Smith, Managing Editor
Manchester law firm enters into administration

Business Recovery Manchester law firm enters into administration

1w Emma Smith, Managing Editor
KPMG appoints new global head of insolvency

Business Recovery KPMG appoints new global head of insolvency

4w Emma Smith, Managing Editor
EY hired by Carillion to review finances

Accounting Firms EY hired by Carillion to review finances

5m Alia Shoaib, Reporter
Using insolvency as a debt recovery tool

Business Recovery Using insolvency as a debt recovery tool

6m Emma Smith, Managing Editor
UK government should support mid-sized businesses to create a ‘new economy’ post-Brexit, says BDO report

Business Recovery UK government should support mid-sized businesses to create a ‘new economy’ post-Brexit, says BDO report

8m Alia Shoaib, Reporter
Over 800 jobs saved as Endless LLP acquires Jones Bootmaker

Business Recovery Over 800 jobs saved as Endless LLP acquires Jones Bootmaker

9m Emma Smith, Managing Editor
FRP Advisory expands operation with new office, partner appointments

Accounting Firms FRP Advisory expands operation with new office, partner appointments

10m Emma Smith, Managing Editor