When an insolvent person considers offering proposals to creditors for an Individual Voluntary Arrangement or IVA, they hear a lot of new terms or what some people might describe as jargon.It takes a little while to get to grips with some of the new jargon. One of the most important aspects of an IVA is the responsibility for Supervision.
Term of Supervision
Supervision of an IVA commences once the IVA has been approved at the Meeting of Creditors. The term IVA Supervisor is the title given to the Insolvency Practitioner or IP who has the responsibility of supervising the IVA from that time until the end of the term of the IVA when it has successfully concluded or until such earlier time when the IVA was concluded with the agreement of creditors or terminated due to the failure of the debtor to adhere to the agreed terms and conditions.
What the Supervisor does
The IVA Supervisor administers the IVA on behalf of the debtor and the creditors. Creditors are no longer allowed to contact the debtor directly and all correspondence from creditors relating to the debtors affairs must now be addressed to the IVA Supervisor and not to the debtor.
The IVA Supervisor collects all IVA contributions from the debtor and lodges all such funds in a specific client account on behalf of the debtor. The Supervisor must keep records of all receipts and payments into and out of that account and reports regularly to the debtor and to all creditors on all such transactions. The Supervisor requests ‘Proofs of Debts’ from creditors and administers the payments to creditors from that account on a pro rata basis.
If the debtor has any assets such as equity in a property, endowment policies, savings or an entitlement to a PPI refund, it is part of the Supervisor’s duties to have such assets realized and contributed to the IVA in accordance with the original IVA agreement for distribution to the creditors. The Supervisor is empowered to take whatever steps are necessary to control such assets such as taking out a restriction on the debtor’s property so as to prevent it being sold without the Supervisor’s knowledge and consent.
On an ongoing basis the Supervisor undertakes periodic reviews of the debtor’s household income and expenditure to determine the affordable monthly payments the debtor must make and as the basis for regular reports to creditors, usually annually.
If additional Meetings of Creditors be necessary to deal with significant changes to the debtor’s financial circumstances, the Supervisor arranges for these to take place in the event that variations to the original IVA agreement are required.
The Supervisor deals with any breaches by the debtor of the terms and conditions of the IVA and may even petition for the debtor’s bankruptcy, if that proves necessary.
For IVAs that conclude satisfactorily, the Supervisor carries out all necessary tasks to close down the IVA including sending final reports to creditors and issuing a Certificate of Completion of the IVA to the debtor.
Written by Paddy Byrne