The IVA process has three principal parties involved. First there is the debtor who is insolvent; secondly there are the creditors from whom the debtor has borrowed money which he (or she) cannot now repay (in full at least); finally there is the Insolvency Practitioner (IP) whose role includes acting as an honest broker between the debtor and the creditors. For an IVA to succeed, each of these three parties must work together with the others in honest and transparent relationships.
The Debtor’s Goal and Perspective
- To regain control of personal finances
- To end the constant worry about being able to pay bills
- To stop the incessant letters and phone calls from creditors and debt collectors
- To hold onto the family home
- To freeze penalties and interest and stop the indebtedness growing
- To prevent – if possible – neighbours, friends and family from learning of the financial problems
- To avoid the shame and stigma of bankruptcy
- To retain employment and/or to stay in business
- To repay creditors as much as possible
- To conclude the IVA process within a reasonable period of time
The Creditor’s Goal and Perspective
- To recover as much as is reasonably possible of the monies owed by the debtor
- To avoid incurring the costs of making the debtor bankrupt
- To avoid the direct and indirect costs of recovering the debts
- To make realistic bad debt provisions
- To treat customers fairly and thus maintain and enhance the company’s reputation
- To minimise losses attributable to bad debts
The IP’s Goal and Perspective
- To enable the debtor to address his (or her) financial problems
- To advise the debtor fully and truthfully on all available options
- To find the best solution for the debtor in accordance with insolvency law
- To ensure that IVA proposals are feasible and fair to the debtor and creditors
- To have a reasonable expectation that the debtor will meet the terms of the proposal
- To put the debtor’s proposals to creditors for their consideration
- To act as an honest broker between the debtor and creditors