Dealing with the Third Phase of an IVA
You have at this stage completed the first phase of your IVA which involved taking advice, planning what to do about your insolvency and making appropriate decisions. You have also completed phase two which was the preparation of your IVA proposal in co-operation with your chosen insolvency firm which then circulated it to your creditors with a date and venue for holding a meeting of your creditors.The third and crucial phase is the holding of that meeting of creditors (MOC). Your IP, whom you have nominated to help you, hence the term ‘nominee’, will have arranged a venue, date and time for the MOC. In practice, creditors rarely attend such meetings personally. They usually communicate in writing with the IP, providing him or her with proofs of debt and voting instructions by letter, fax and e-mail. The voting instructions will be to accept or reject your IVA proposal via what is called ‘proxy voting’. This simply means that they will not be personally present to cast their vote. They authorize, by proxy, another person, usually the chairman of the meeting, to vote in accordance with their instructions. They may also vote to amend the terms of the proposal in what are called modifications.
You will be kept informed of the progress of the MOC and you must decide whether to agree to any modifications suggested by your creditors. The nominee communicates with the creditors on your behalf and can adjourn the MOC for up to two weeks while you decide what to do. At least 75% by value of those of your creditors who chose to vote must accept your proposal and you must of course agree to accept the creditor modifications, if any, for your IVA to be approved. Once these two conditions are met the IVA is officially
approved and becomes binding on you and on all of your unsecured creditors, including those creditors who chose not to vote at all. You can of course decide not to proceed and to withdraw your IVA proposal at any time up to and including the MOC.
If you should do this, you should be no worse off than before and you should not incur any costs for work done up until now by the nominee and any other staff of your insolvency firm. Assuming you agree to proceed, your IVA can now be said to be commencing.
That completes the third phase of your IVA and you have next to deal with the result of the vote at the MOC. If your proposal has been rejected by creditors, the process is over. If it has been accepted, you will move into the fourth phase of your IVA, the commencement phase and we will look at this in our next article.
Written by Paddy Byrne
03 / 09 / 2012