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February 1, 2008

New code of conduct for IVAs

by Gill Montia

Story link: New code of conduct for IVAs

Commercial and other organisations involved in debt management have signed up to a voluntary code of conduct on Individual Voluntary Arrangements (IVAs), which has been developed with the help of The Insolvency Service.

IVAs have been in use since 1986 and offer an alternative to bankruptcy to individuals and companies that have sufficient assets and/or income to repay at least a proportion of their debt.

Debtors and their advisors put a proposal to creditors which requires the support of at least 75% (by value) of the creditors. If agreed, the proposal is supervised by a licensed Insolvency Practitioner.

IVAs benefit creditors in that they can usually provide significantly higher returns than bankruptcy.

The new code incorporates standard terms and conditions and aims to ensure that the processes involved in obtaining an IVA are transparent.

All parties to an IVA are bound to disclose relevant matters and must work to a standard framework.

Patrick McFadden, Minister of State for Employment Relations and Postal Affairs says: “The Insolvency Service has facilitated a process which has successfully produced a voluntary code for IVAs to reflect the changing needs of the market. It will provide greater transparency for creditors and debtors alike by using standard clauses and a consistent format. This protocol is a significant achievement for everyone involved.”

 

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