Key Activities

During 2005 we followed up the recommendations we made in our Annual Report for 2004 on better IVA statistics, “best advice” and timely communication in our regular meetings with the Insolvency Service and the Joint Insolvency Committee (JIC) with the results reported above. In addition we responded to consultation documents from the IS on simplified Voluntary Arrangements (SIVAs) and on Debt Relief Orders (DROs). We summarise the IPC’s view on these and other key issues in the rest of this section.

SIVAs
The IS set up a working group in September 2004, consisting of representatives of the larger firms offering IVAs and/or debt management arrangements to personal debtors and of other stakeholders, including the major lenders, to consider how to create a simpler and less expensive form of IVA which would benefit both debtors and creditors.

The IS published a consultation document in July 2005, inviting public comment on the following recommendations made by the working group:-

• Simpler standardised terms and conditions and a standardised fee structure should apply to all IVAs covering debts up to £75,000. All SIVAs should offer the creditors a better return than bankruptcy, with debtors paying the maximum they could afford;
• Where debts did not exceed £25/30,000 there would be no creditors’ vote on the IP’s proposal for an IVA. For cases between £25/30,000 but below £75,000 the proposal would require acceptance (without modifications) by a simple majority of creditors rather than the current 75%; and that v Debtors whose behaviour had been irresponsible, reckless or dishonest could be barred and creditors would retain the right of appeal to the courts.

Table 1 – Personal Insolvency Statistics
IVAs and Personal Bankruptcies in England & Wales between 1997 and 2005


In our response we welcomed most of the Working Group’s proposals for a simplified IVA (which we had recommended as desirable in our Annual Report 2003), with three main provisos:-

• We recommended that, in order adequately to protect creditors’ interests, all proposals for SIVAs should require a formal approval by a simple majority vote of creditors, not just those where debts exceeded £25/30,000;
• A simple majority vote of creditors should also be required to approve a decision on whether or not bankruptcy proceedings should be instituted when a SIVA fails;
• There should be adequate safeguards and monitoring to help ensure that IPs and the firms employing them comply with their duty to give best advice to the debtors. We understand that the IS is now considering the numerous responses to the consultation document it has received before it puts forward its own proposals for introducing SIVAs.

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