Will 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.

Share

Subscribe to get your daily business insights

Resources & Whitepapers

Why Professional Services Firms Should Ditch Folders and Embrace Metadata
Professional Services

Why Professional Services Firms Should Ditch Folders and Embrace Metadata

3y

Why Professional Services Firms Should Ditch Folde...

In the past decade, the professional services industry has transformed significantly. Digital disruptions, increased competition, and changing market ...

View resource
2 Vital keys to Remaining Competitive for Professional Services Firms

2 Vital keys to Remaining Competitive for Professional Services Firms

3y

2 Vital keys to Remaining Competitive for Professi...

In recent months, professional services firms are facing more pressure than ever to deliver value to clients. Often, clients look at the firms own inf...

View resource
Turn Accounts Payable into a value-engine
Accounting Firms

Turn Accounts Payable into a value-engine

3y

Turn Accounts Payable into a value-engine

In a world of instant results and automated workloads, the potential for AP to drive insights and transform results is enormous. But, if you’re still ...

View resource
Digital Links: A guide to MTD in 2021
Making Tax Digital

Digital Links: A guide to MTD in 2021

3y

Digital Links: A guide to MTD in 2021

The first phase of Making Tax Digital (MTD) saw the requirement for the digital submission of the VAT Return using compliant software. That’s now behi...

View resource