November 2016 Credit Management magazine

SOAPBOX CHALLENGE
INVOLUNTARY ACTION
A credit control manager, based in Belfast, needs convincing
about the effectiveness of IVAs.
SOAPBOX
challenge
A
person with multiple debts and an
inability to pay them couldn’t fail
to be seduced by the plethora of
advertisements for a solution that
promises to make them debt free within five
years. But just how successful are Individual
Voluntary Arrangements (IVAs) and do they
offer any benefit to the small unsecured
creditor?
As an unsecured trade creditor I will share
with you my recent experiences. In one month
our company received Annual Reports for
three IVAs with the same Supervisor from a
major firm of Insolvency Practitioners.
In the first report received, the debtors’
monthly contributions in the interlocking IVAs
are up to date but ‘the debtors have failed
to comply with my request for an updated
income and expenditure account and are
hereby notified of the fact that they are in
breach of the terms of the arrangements’. This
happened the previous year and I do not know
My experience with IVAs would also suggest that the
smaller unsecured creditor has no influence on the
outcome of proposals anyway as the major creditors
(that is to say the bank, mortgage provider, credit card
company etc) vote in favour in the majority of cases. We
end up tied into an agreement and are prevented from
taking further action to collect our debt.
if the information was ever received.
The second report related to a case where
a one-off lump sum payment was to be made
to the arrangement. The report states that:
‘Funds in the sum of £25,000 were due to be
realised for the benefit of creditors in June
2015. These funds have yet to be received.
The matter is currently being addressed’.
Over a year has passed and the issue still not
addressed.
The third report shows that the arrears in
monthly contributions, already five months
behind in 2015, have doubled since last year.
Again: ‘The Supervisor is currently in the
process of requesting the required information
to conduct an income and expenditure
review’. Why bother I ask myself? The
arrangement has clearly failed.
It seems obvious to me that the
Supervisor’s persistence with these cases is
solely to protect his firm’s fees. My experience
with IVAs would also suggest that the smaller
unsecured creditor has no influence on the
outcome of proposals anyway as the major
creditors (that is to say the bank, mortgage
provider, credit card company etc) vote in
favour in the majority of cases. We end up tied
into an agreement and are prevented from
taking further action to collect our debt.
Am I alone in feeling cynical about the
role of the Insolvency Practitioner? Do other
readers share my frustrations? If you do, then
I’d love to hear from you through the editor.
24 November 2016 www.cicm.com
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