Before entering an Individual Voluntary Arrangement people may be concerned about payment of fees. This should not be a worry since it is really the creditors who pay the fees. Monies which the insolvent debtor contributes to the IVA go towards repayment of his or her debts. These contributions make up ‘the IVA fund’ and the fees of the IVA are paid from this fund.
The Insolvency Practitioner (IP) acts as the Supervisor of the IVA (after the debtor’s proposals are approved at the Meeting of Creditors) and receives the contributions from the debtor over the life of the IVA and is responsible for controlling the fund and making payments from it.
These payments can be broadly broken down into three types: dividends to creditors; fees payable to the IP and disbursements such as the cost of registration of the IVA, insurance and VAT on transactions. Fees are agreed by all parties when the Meeting of Creditors approves the IVA. The IP may not charge more than the agreed amounts without the express permission of the creditors.