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Key
Activities - Individual Voluntary Arrangements
In July, at
a specially convened Seminar, the Insolvency Service presented the findings
of the research carried out in 2002 by Michael Green, Research Fellow at
the University of Wales into IVAs.
Following the Seminar, the IS decided to set up a working group to
consider the IPC
recommendation that there could be a simpler, less expensive form of IVA
to serve the needs of the personal debtor. The current IVA was introduced
in 1986; primarily to serve the needs of the small unincorporated business.
This still applies but the dramatic increase in the number of IVAs is attributable
to the current high level of over-indebtedness amongst ‘consumer
debtors’.
The working group, made up of representatives of some of
the organisations that handle the greatest number of IVAs is making good
progress. The IPC had an exchange of views with the IS about the work of
the group in December and will be included in the consultation process
when the first report of the working group’s report is published
later in 2005. The IPC supports the view that there is scope for a simpler
and less expensive process for dealing with those situations where avoidance
of bankruptcy is better for both debtors and creditors.
Following
our recommendation of 2002 – ‘The JIC should obtain
details of VAs on an annual basis to enable performance tables to be completed
etc’ (see page
11) the profession commissioned further research by Michael Green with our
recommendation as his remit.
The details of his research will be released in April 2005.
The main point at issue is whether the RPBs and the JIC at present get
sufficient and sufficiently timely information about the outcome of IVAs
to monitor whether debtors and creditors are always receiving best advice
from all practitioners who act as Nominees and Supervisors in VAs. This
issue is discussed in more detail in our recommendation on statistical
information on pages 7 and 8 above.
The following
table (updated from 2003) shows the numbers of IVAs and bankruptcies over
the past decade. The significant rise (approximately 25%) in both IVAs
and bankruptcies confirms the need for the processes to be regularly reviewed
to see if they match the present day needs.

In addition to our recommendation
on statistical information, the IPC also believes that the
requirement on IPs to give ‘best advice’ to individual debtors
on the options open to them has become more important with the entry into
force of the Enterprise Act 2002 and the proposed changes to the IVA. Our
third recommendation on Page 9 accordingly proposes that IPs should give
debtors a reasoned written recommendation as to which option is most appropriate
for their circumstances.
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