{"id":10275,"date":"2011-10-14T09:10:05","date_gmt":"2011-10-14T08:10:05","guid":{"rendered":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/?p=10275"},"modified":"2019-07-04T09:38:58","modified_gmt":"2019-07-04T08:38:58","slug":"iva-approval-rejection","status":"publish","type":"post","link":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/iva-approval-rejection\/","title":{"rendered":"IVA Approval &#038; Rejection"},"content":{"rendered":"\n<h2 class=\"wp-block-heading\">Approving or rejecting an IVA can be a strange process<\/h2>\n\n\n\n<p>The insolvent debtor who offers a proposal for an Individual  Voluntary Arrangement (IVA) to his or her (unsecured) creditors is really in the lap of the gods. This is because the creditors have all  the power in the matter and can choose to accept the proposal as it  stands, to reject it out of hand or to ask for changes to the proposal which usually have the effect of costing the debtor more than he or she  intended to offer.<\/p>\n\n\n\n<!--more-->\n\n\n\n<p>In fact this third outcome can carry within it the  seeds of the failure of the IVA in its supervision stage, if the  creditors are too grasping or greedy at the voting stage. The  unfortunate debtor may feel pressurized to agree to modifications which  require higher contributions to the IVA than what he or she can afford.<\/p>\n\n\n\n<figure class=\"wp-block-image\"><img loading=\"lazy\" decoding=\"async\" width=\"423\" height=\"283\" src=\"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-content\/uploads\/2019\/07\/Fotolia_7616459_XS.jpg\" alt=\"Creditors in an IVA\" class=\"wp-image-10292\" srcset=\"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-content\/uploads\/2019\/07\/Fotolia_7616459_XS.jpg 423w, https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-content\/uploads\/2019\/07\/Fotolia_7616459_XS-300x201.jpg 300w\" sizes=\"auto, (max-width: 423px) 100vw, 423px\" \/><\/figure>\n\n\n\n<p>So there are three choices available to creditors: to accept the  proposal as it stands, to accept it subject to the debtor agreeing to  (sometimes draconian) modifications or to reject the proposal.<\/p>\n\n\n\n<p>Only unsecured creditors are allowed to vote at the meeting of  creditors. However, there can sometimes be a chink of light for the  debtor if he or she has the \u2018right\u2019 mix of creditors and if the \u2018right\u2019  creditors vote. First of all not all of a debtor\u2019s creditors need to  vote for a decision to be made approving, rejecting or modifying the  debtor\u2019s IVA proposal. In fact as long as one creditor votes, a decision  can be made. That is of course provided that all the unsecured  creditors had the opportunity to vote.<\/p>\n\n\n\n<p>Assuming then that more than one creditor decides to exercise their  right to vote, what is the level of acceptance needed for the IVA to be  approved? A simple way to look at it is that each creditor has one vote  for every \u00a3 that the debtor owes to that creditor. So if there were  eight creditors called A,B,C,D,E, F, G and H, to whom the debtor owed a  total of $100,000 in the respective amounts of say \u00a340,000, \u00a326,000,  \u00a314,000, \u00a38,000, \u00a35,000, \u00a34,000, \u00a32,000 and \u00a31,000 there would be  potentially 100,000 votes. In practice of course, not all creditors  exercise their right to vote. Of those who do vote, at least 75% of the  cast votes must be in favour of the IVA for it to be approved and to be  binding on all the creditors, including those who did not vote. Let\u2019s  look at a few examples of how the vote might go.<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Creditor A: \u00a340,000 <\/li><li>Creditor B: \u00a326,000<\/li><li>Creditor C: \u00a314,000 <\/li><li>Creditor D:\u00a0 \u00a38,000<\/li><li>Creditor E:\u00a0 \u00a35,000 <\/li><li>Creditor F:\u00a0 \u00a34,000<\/li><li>Creditor G:\u00a0 \u00a32,000 <\/li><li>Creditor H:\u00a0 \u00a31,000<\/li><\/ul>\n\n\n\n<p>Suppose that only creditor H chooses to vote and accepts the \nproposal, then that decision is binding on all the other creditors and \nconstitutes 100% acceptance.&nbsp;&nbsp;<\/p>\n\n\n\n<p>Suppose creditor B votes to reject the proposal with all other \ncreditors voting to accept it, then the proposal is rejected as only 74%\n voted to accept it and that decision is binding on all creditors.<\/p>\n\n\n\n<p>Suppose creditor E votes to accept the proposal and creditor H votes \nto reject it and none of the other creditors cast a vote, then the \nproposal is accepted as that constitutes over 83% acceptance and that \ndecision is binding on all creditors.<\/p>\n\n\n\n<p>Finally suppose creditors A &amp; B vote to accept the proposal and \nall other creditors vote to reject it, then the proposal is accepted \nwith 76% voting for it and that decision is binding on all creditors.<\/p>\n\n\n\n<p>Obviously there are many other possible voting scenarios in this \nexample case. Everything depends on whether creditors choose to vote, on\n what their relative voting strengths are and of course on how they \nchoose to vote. The nominee is responsible for summoning creditors to \nthe meeting of creditors but even a creditor who has not received notice\n of the meeting is still bound by its decision. However a creditor who \ndid not receive notice of the meeting may challenge the decision of the \nmeeting on one of two grounds: that the approved IVA unfairly prejudices\n their interests or that there has been some material irregularity at or\n in relation to the meeting of creditors. There are time limits for a \ncreditor to make such a challenge.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<\/p>\n\n\n\n<p>Creditors frequently propose modifications to a debtor\u2019s IVA \nproposal. Many such modifications are intended to increase the estimated\n dividend to creditors. They may for example require the debtor to make \nhigher monthly payments than originally proposed or to contribute a lump\n sum from for example the release of equity from re-mortgaging a \nproperty. The debtor may choose to accept such modifications, to suggest\n alternatives to the modifications or to refuse to agree to some or all \nof them, usually giving reasons why they are not acceptable. The \nchairman of the meeting will discuss the debtor\u2019s response to \nmodifications with the creditors and creditors may choose to alter or \neven remove the modifications, where the debtor has made a compelling \ncase. However, if the debtor refuses point blank to accept the \nmodifications and creditors are not amenable to altering or removing \nthem, then the proposal is usually rejected.<\/p>\n\n\n\n<p>The final choice open to creditors is straightforward rejection of \nthe debtor\u2019s proposal as is their prerogative, since they did provide \ncredit to the debtor and can demand that it be fully repaid provided \nthat their decision is made in compliance with the principles of \ntreating their customer fairly. In rejecting an IVA proposal outright, \ncreditors may feel for example that the IVA proposal is a totally \ninadequate attempt at repayment or they may feel that the prospects of \nthe debtor adhering to the terms and conditions of the IVA are poor. &nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Creditors have all the power in choosing to accept an IVA proposal or to reject it out of hand or to ask for changes.<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_seopress_robots_primary_cat":"none","_seopress_titles_title":"","_seopress_titles_desc":"","_seopress_robots_index":"","footnotes":""},"categories":[7],"tags":[],"class_list":["post-10275","post","type-post","status-publish","format-standard","hentry","category-iva-articles"],"_links":{"self":[{"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/posts\/10275","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/comments?post=10275"}],"version-history":[{"count":1,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/posts\/10275\/revisions"}],"predecessor-version":[{"id":10293,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/posts\/10275\/revisions\/10293"}],"wp:attachment":[{"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/media?parent=10275"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/categories?post=10275"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/tags?post=10275"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}