BusinessBusiness RecoveryIVA figures drop but bankruptcies leap

IVA figures drop but bankruptcies leap

IVA figures fall, but bankruptcies climb - experts warn that rising interest rates could see overall figures jump in the near future

Individual insolvencies increased by 4.2% in Q2 2007 compared with a year
earlier due to a sharp increase in bankruptcies, as IVA figures fell.

There were 26,956 individual insolvencies in England and Wales during Q2
2007, with bankruptcies climbing by 7.7% on the same period a year earlier to
16,258.

IVAs fell on a year earlier by 0.7%, to 10,698, according to the

Insolvency Service statistics
.

However, KPMG said these figures showed an increase in the number of IVA
proposals turned down by the banks, which had led to a slowdown in the number
accepted.

‘These high rejection rates explain in part the slowdown in IVAs being
entered into,’ said KPMG head of insolvency Steve Treharne. ‘Creditors are
taking a harder line in deciding which IVAs to accept, and debt solution
companies are wary of putting forward IVAs which may not meet the approval of
creditors.’

Pat Boyden, an expert in personal insolvencies at PricewaterhouseCoopers
business recovery services, said that as some banks had been more inclined to
turn down IVA proposals, some of these indebted had instead taken bankruptcy.

‘If banks are too hard [on IVA proposals] they might drive some through to
bankruptcy,’ he said.

Boyden predicted that the next quarterly figures would show slightly lower
growth than Q2, but pressures of rising fuel bills and interest rates could see
bankruptcies and IVA rates climb again.

Further reading:

Insolvency practitioners ‘not to blame’ for
mis-sold IVAs

IVA fees: one size does not fit all

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