Meeting Of Creditors

It’s still referred to as a “meeting” as this is the term used in legislation. In reality, the meeting time is just the time by which creditors must respond to the proposals and cast their vote.

IVA applicants normally have no requirement to attend any such ‘meeting of creditors’ although they are usually required to be available by telephone on the day to discuss any questions or modifications creditors may require.

Voting criteria

All included creditors are entitled to vote on the IVA Proposal. It requires at least 75% of the vote, by the value of the debt, to be in favour of the proposal for it to be accepted.

Not all of the creditors may choose to vote. The IVA will still be accepted if 75%, by value of the debt, of the creditors who do so – vote in favour.

Regardless of the number of creditors or the breakdown of the voting, once the proposal has been accepted, it is binding on all creditors. Even if a creditor voted against the proposal, or did not submit a vote at all, they are still bound by the agreement and cannot take alternative action.

Modifications

Whilst we endeavour to prepare proposals that will be accepted, in some instances creditors can put forward modifications to a proposal.

Examples of modifications:

• Requesting the applicant seeks full time employment (if the applicant is currently working part-time).
• Requesting for an increase in contributions.
• Restrictions on the fees charged to them by the IVA provider.

In all cases, the Insolvency Practitioner or a member of their team will contact the applicant to agree any changes to the proposal. It is the applicant’s decision as to whether to agree to the changes and to go ahead with the IVA or not.

Omitted Creditors

While we must be informed of all known creditors, should one be omitted in error from the proposal and emerge once the IVA is under way, they can be included within the arrangement retrospectively. They are entitled to demand an amount equal to that which they would have received if they’d been included since the beginning.

Depending on the size of the debt the IVA holder may be asked to increase payments or extend the term of the IVA to ensure that including the additional debt does not have a detrimental affect on other creditors.

After the meeting of creditors

Clients are phoned shortly after the meeting to be informed of the outcome. Confirmation is also sent in the post with, if applicable, details of any modifications from the original proposal. This must be signed and returned to confirm everything is understood.