Insolvency Practitioners and Lenders Act to Stem Flow of Paper Work Caused by Massive Upsurge in IVA
At the forum over 125 delegates from the finance industry and Insolvency Practitioner firms were asked to list their top three issues relating to the production and processing of IVAs. Creditors listed the volume of correspondence, the desire for a standard format for proposals and confirmation that an IVA is the most appropriate route for a debtor in financial difficulties as their top three concerns.
Steve Treharne, Head of Personal Insolvency at KPMG said: “As the number of IVA proposals continues to rise dramatically, a huge volume of paper work is produced. This causes major problems for creditors in the processing of IVAs. The same proposal quite often can be sent out as many as 6 times to creditors who may have customers with multiple accounts and the Insolvency Practitioner firms have to pay for the paper, post and packaging, increasing unnecessary costs. Such duplication seems wholly unnecessary and ways to streamline the process need to be found. However this relies on the understanding from both the lenders and Insolvency Practitioners on how this process can be best managed.”
The Insolvency Practitioners who attended the forum expressed concern at the number of modifications proposed by creditors or their representatives to the debtor’s original offer, especially as some of the modifications appeared to contradict those proposed by other creditors. In addition, uncertainty regarding the way in which the debtor’s interest in his property should be addressed and the lack of votes received in time for the creditors’ meeting made up their top three concerns regarding the production and processing of IVAs.
Treharne said: “Feedback following the forum has been extremely positive from all parties concerned. We have noticed already that both creditors and Insolvency Practitioners have a better understanding of the issues and action points are being implemented. A 2nd forum is scheduled for later this year to ensure that this momentum continues.”
A working party including representatives from creditor organisations and Insolvency Practitioner firms who specialise in producing IVAs has been tasked with taking forward the action points identified.
Treharne also welcomed the publication of the Government’s response to the consultation paper “Improving Individual Voluntary Arrangements.” Treharne said “It is good to see that the idea of a Simple Individual Voluntary Arrangement has been broadly accepted by the Industry. This revised procedure will help to cut out much of the bureaucracy that bedevils the current process and will make the IVA more accessible to those struggling with debt. It is good news for the creditors too as the suggested reduction in paperwork will streamline the process and take out many of the frustrations that the present over bureaucratic system causes.”
