Creditors' decision-making in an IVA

Produced in partnership with Marcus Haywood of South Square Chambers
Practice notes

Creditors' decision-making in an IVA

Produced in partnership with Marcus Haywood of South Square Chambers

Practice notes
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General

It is the creditors who decide whether, and if so, to what extent an individual voluntary arrangement (IVA) proposal should be accepted.

Physical meetings are no longer the default decision-making procedure and the Nominee may choose a qualifying decision procedure to obtain the creditors’ decision on the proposal. These are set out in the Insolvency (England and Wales) Rules 2016 (IR 2016), SI 2016/1024, Pt 15.

The relevant decision procedure or meetings will be under the control of the convener or chair who is invariably the nominee, unless the latter is unable to attend when a replacement will attend on their behalf.

Creditors’ consideration of the proposal

The starting point for any IVA is the debtor’s proposal. IR 2016, SI 2016/1024, r 8.3 sets out the prescribed content of an IVA proposal.

If the debtor does not seek an interim order, the nominee must confirm to creditors their view on the viability of the debtor’s IVA proposal within 14 days of the debtor finalising the proposal document.

Where the debtor seeks

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Marcus Haywood

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Jurisdiction(s):
United Kingdom
Key definition:
Insolvency definition
What does Insolvency mean?

This can be defined by two alternative tests (Insolvency Act 1986, s 123):

cash flow test: a company is solvent if it can pay its debts as they fall due, no matter what the state of its balance sheet (Re Patrick & Lyon Ltd [1933] Ch 786);

• balance sheet test: a company which can pay its debts as they fall due may be insolvent if, according to its balance sheet, liabilities (including contingent liabilities) exceed assets.

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