INSOLVENCY SERVICE
News Release (Ins/Coms/03) issued by The Government News Network on
8 May 2007
The Insolvency
Service began a 12 week consultation process today looking at
proposals to simplify Individual Voluntary Arrangements (IVAs).
Proposals to simplify the current process for those with
undisputed debts of less than £75,000 include approval of an IVA
by a simple majority vote, creditors not being able to change the
debtors proposals and creditors having to file their claims within
90 days. There are also proposals to reduce the administrative
burden and on Insolvency Practitioners (IPs) who supervise IVAs
ultimately reducing the administrative cost to the debtors.
IVAs were introduced just over 20 years ago under the 1986
Insolvency Act to provide a flexible debt resolution alternative
to bankruptcy for professionals and company directors, supervised
by Insolvency Practitioners (IP). They provided debtors with the
certainty of making reasonable payments over a set period of time
while providing maximum returns to creditors. Since their
introduction IPs have continued to supervise IVAs but a growing
number of people in full time jobs with debts take up them up as a
means of managing their debts.
The consultation ends on the 3rd August 2007. Full details of
the consultation document can be found on the Insolvency Service
website http://www.insolvency.gov.uk
Notes to Editors
1. Individual Voluntary Arrangements (IVAs) were introduced by
Insolvency Act 1986 following the Cork Review in 1982 where it was
recognised that a flexible alternative to bankruptcy was needed
for company directors, members of professions and traders to
address their complex financial affairs.
2. IVAs are available to all individuals. They can last for a
period of upto 5 years and must be supervised by an Insolvency
Practitioner. The simplified regime will only be available to
debtors with undisputed debts of less than £75,000. The current
regime will remain in place for those with debts of more than
£75,000. The PriceWaterhouseCoopers report 'Living on
Tick' shows that over 90% of IVAs were entered into by those
in employment. According to KPMG, in 2005 approximately 80% of all
IVAs had unsecured liabilities of £75,000 or less which would
enable them to apply for the entry to the new procedure.
3. Earlier on this the year, The Insolvency Service and the
British Bankers Association co-chaired by a forum (hosted by
KPMG). Delegates included creditors, insolvency practitioners,
debt advisors and academics. The forum showed their continuing
support for IVAs and reiterated that the current system needed
review to reduce the complexities of the system and the
administrative burden.
4. In 2001 there were 6,298 IVAs and in 2006 there were 44,332.
The shows that an increasing number of people are continuing to
take steps to manage their debts effectively and give creditors
better returns.
5. The Insolvency Service administers the insolvency regime
investigating all compulsory liquidations and individual
insolvencies (bankruptcies) through the Official Receiver to
establish why they became insolvent.
6. The Insolvency Service carries out confidential enquiries on
behalf of the Secretary of State for Trade and Industry through
Companies Investigation Branch. The Service also authorises and
regulates the insolvency profession; deals with disqualification
of directors in corporate failures; assesses and pays statutory
entitlement to redundancy payments when an employer cannot or will
not pay employees; provides banking and investment services for
bankruptcy and liquidation estate funds; and advises ministers and
other government departments on insolvency law and practice.
Further information about the work of The Insolvency Service is
available from http://www.insolvency.gov.uk