Make Your IVA Vote Count

Image: Severin Stalder/severinstalder/Unsplash
Image: Severin Stalder/severinstalder/Unsplash

Through in-depth knowledge of the Insolvency Act 1986 Senior Associate Joanna Buckley achieved a fantastic result for a client, which saw security granted outside of an IVA.

Background 

Greenhalgh Kerr was instructed to recover large sums from a guarantor following the demise of the limited company, of which they were a director. 

A statutory demand was served on the director and a bankruptcy petition was presented following their failure to pay the sums owed. 

The first hearing of the petition was adjourned as the director proposed an IVA to creditors.

Due to the conduct of the director generally and in particular, failing to assist with recovery of the high value assets subject to the hire agreement, the client did not wish to vote in favour of the IVA. 

An IVA requires 75% majority by value of creditors to approve it. Our client’s debt constituted more than 35% of the overall debt and therefore it was clear that their vote would influence the overall outcome.

Following enquiries into all creditors noted on the proposal, a number of creditors were ‘associated creditors’ as per s435 of the Insolvency Act 1986.

As there were associated creditors the IVA would have two rounds of voting:

  • The first vote is 75% by value of creditors or more in favour
  • The second round of voting (which excludes the associated creditors) 50% or more in value in favour

Following negotiations with the creditors, our client was able to use the power of their vote to their advantage. The decision for the creditors was to either accept our client’s proposal, which meant that the return for creditors was much improved and our client was granted a charge on the property.

Or our client would reject the IVA and continue with its bankruptcy petition with a risk all creditors would receive a much lesser return following a bankruptcy order being made. We were able to successfully negotiate a property charge for our client and the IVA was approved and the petition dismissed.

Take away points

  • An IVA is not a foregone conclusion and there is of course no guarantee that it would also run its course. Creditors are often made to wait long periods of time before any returns are made. In obtaining a voluntary charge our client’s debt was secured meaning payment to them will be guaranteed regardless of the outcome of the IVA.
  • Make your vote count particularly if the value of your debt will influence the overall outcome.
  • Coming up with a strategy at an early stage is fundamental to achieving better results. 

Joanna Buckley

Greenhalgh Kerr
Olympic House, Beecham Court,
Smithy Brook Rd,
Wigan WN3 6PR

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+44 (0)333 200 5200

We are confident in our work and we know that recoveries is a key part of a lender or creditor’s business

We are confident in our work and we know that recoveries is a key part of a lender or creditor’s business. We have designed our pilot projects to give lenders and creditors the comfort and confidence in our service before formally and fully switching recoveries providers. This time also allows new clients to benchmark our service levers and results against existing providers and others.

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01

You choose 10 recoveries cases

You choose 10 recoveries cases to get us started. We’ll deliver our usual onboarding protocol where we’ll get to know you and your systems, culture, methods, preferences, and requirements.

02

We get started

We assess each case by setting a strategy then grading and reporting on the case in terms of prospects and timescales and cost. We make immediate contact with debtors, and pursue a recovery in our tried and tested ways.

03

We review

We deliver ongoing, structured, tailored reports as per your needs and carry out a full 3-month review on these 20 cases. There we’ll discuss how we have worked together, patterns we have seen in your borrowers, your systems, your documents, your pre-legal conduct, outcomes, highs and lows, legal costs (and costs borne by debtors), and possible improvements in all of these.

04

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