Will my creditors agree to my IVA
Getting creditors votes
Before an IVA can begin, your creditors must be given an opportunity to vote as to whether they agree to the proposed IVA or not.
The voting takes place during what's known as the creditors meeting, a virtual meeting rather than face to face one, chaired by your Insolvency Practitioner.
At the end of the meeting all the votes are counted and the outcome is announced.
There needs to be acceptance of the IVA proposal by at least 75% of your creditors (in debt value terms) of those that vote, before the IVA becomes legally binding on all of your creditors.
Once the IVA has been agreed by the necessary majority, it becomes legally binding on all creditors, even if they initially rejected your proposal.
So getting your creditors to agree to your proposal is vital for your IVA application to be a success.
So why would a creditor agree to an IVA?
Creditors understand that a small proportion of their customers will fall on hard times and be unable to maintain their financial commitments. They make allowances for such events and have strategies in place to minimize their losses when this happens.
When they are confronted with an IVA proposal, they are given a clear breakdown of the comparative returns they could expect from both the proposed IVA and the potential return from the applicant's bankruptcy.
The IVA will usually show a significant advantage to the creditor by demonstrating a greater financial return over a longer period when compared to the bankruptcy alternative.
It is for this reason that creditors will agree to an IVA. Quite simply, they will see a financial benefit to their shareholder and the company's bottom line by agreeing to the IVA because for them it makes perfect business sense.
However, some creditors do take a dim view of IVAs and will occasionally try to block an IVA from becoming accepted.
So, if you are considering entering into an IVA, it is wise to discuss your circumstances with a professional IVA adviser as soon as possible. It may be that you have a creditor who is known to be less accepting IVAs , making the IVA option a nonstarter.
Call an adviser now on 0800 856 8569.