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Individual Voluntary Arrangement (IVA)

What is an IVA?

  • This procedure enables an individual to put proposals to creditors to pay all or part of their debts through a formal arrangement which binds all creditors.

What is the purpose of an IVA?

  • The procedure is usually used when an individual has sufficient assets or income to pay creditors but needs additional time to do so.  Or if an individual works in a profession that does not allow for its members to become bankrupt.

  • Unlike bankruptcy, it allows the individual’s assets to remain within their control, although the arrangement itself is under the control of an Licensed Insolvency Practitioner who acts as Supervisor.

How does an individual enter into an IVA?

  • The individual will prepare a proposal to put to their creditors with the assistance of a licensed Licensed Insolvency Practitioner who is known as the nominee.

  • The proposal can make any number of suggestions to creditors.  However, in practice the individual must offer the creditors a better outcome than they would expect to receive if the individual were to be made bankrupt.

  • The nominee will report to creditors, if in their opinion, creditors should consider the proposal.

  • Creditors are asked to vote on the proposal by a decision procedure.

  • Creditors may approve, change or reject the proposal.  If 75% in value of the creditors vote to approve the proposal, it is binding on all creditors.

  • If the proposal is approved, the Nominee becomes the Supervisor and implements the arrangement under the proposal.

  • If there is pressure from creditors or an impending petition, a moratorium (period of protection from claims by creditors) can be sought at the outset which will protect the individual’s assets.

What are the duties of the Nominee/Supervisor?

  • Nominee

    • To assist the individual in preparing a viable proposal to put to their creditors.

    • To report to creditors if the proposal should be considered and invite creditors to vote on the proposal by a decision procedure.

    • To make an application for a moratorium if appropriate.

  • Supervisor 

    • To ensure that the individual adheres to the terms of the arrangement

    • To agree creditors' claims.

    • To collect and distribute funds to creditors.

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