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simplified IVAs will not be introduced

19 November 2008

Earlier this year the Insolvency Service presented a draft of The Legislative Reform (Insolvency) (Individual Voluntary Arrangements) Order 2008 (the Order) to Parliament. The Order was set to amend the Insolvency Act 1986 (the 1986 Act) in relation to IVAs and to introduce Simplified IVAs.

The intention of the Order was to reduce burdens on those who administer IVAs and in turn reduce costs, thereby benefiting the debtor and his creditors. Three stated objectives were:

  1. To extend access to the fast-track IVA provisions contained in Part eight of the 1986 Act to debtors who are not undischarged bankrupts and to permit insolvency practitioners and authorised persons to administer such arrangements;
  2. To remove unnecessary requirements to report to court with respect to certain IVAs and;
  3. To permit authorised persons to act in relation either to CVAs or IVAs, rather than both, as is currently required.

It was expected that the Order would be implemented in the next few months, however earlier this week the Insolvency Service withdrew the Order.

This decision was made because the Insolvency Service feel that the desired improvements with the administration of IVAs is now being met by non-statutory means and as a result there is no longer a need for further legislation. This is mainly due to the successful operation of the IVA Protocol which has streamlined the process for IVA approval. The intention is that the operation of the IVA Protocol will continue to be monitored by the IVA Standing Committee.

Although Simplified IVAs will no longer be introduced, the Insolvency Service are still planning to proceed with the proposal to amend section 389A of the 1986 Act which provides for authorised persons. Unfortunately, due to requirements of the legislation, it is not possible to implement this change using a Legislative Reform Order and therefore the intention is to make this amendment via a bill when a suitable opportunity arises.

The proposal to remove unnecessary requirements to report to court with respect to certain IVAs will also be continued with. However, this will not be implemented as a single provision but will be added to a Legislative Reform Order which is planned to be brought forward in the new year.

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The content on this page is provided for the purposes of general interest and information. It contains only brief summaries of aspects of the subject matter and does not provide comprehensive statements of the law. It does not constitute legal advice and does not provide a substitute for it.

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